Utility cooperative

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A utility cooperative is a type of cooperative that is tasked with the delivery of a public utility such as electricity, water or telecommunications to its members. Profits are either reinvested for infrastructure or distributed to members in the form of "patronage" or "capital credits", which are dividends paid on a member's investment in the cooperative. [1]

Contents

Each customer is a member and owner of the business. This means that all members have equal individual authority, unlike investor-owned utilities where the extent of individual authority is governed by the number of shares held. Like cooperatives operating in other sectors, many utility cooperatives conduct their affairs according to a set of ideals based on the Rochdale Principles. Some utility cooperatives respect the seventh principle, Concern for community, through Operation Roundup schemes, whereby members can voluntarily have their bill rounded to the next currency unit (e.g. $55.37 becomes $56), with the difference (e.g. 63¢) distributed to a fund for local charities. [2]

Many such cooperatives exist in the rural United States and were created by the New Deal [3] to bring electric power and telephone service to rural areas, when the nearest investor-owned utility would not provide service since it believes that there would be insufficient revenue to justify the capital expenditures required. Many electric cooperatives have banded together to form their own wholesale power cooperatives, often called G&Ts for "generation and transmission", to supply their member-owners with electricity.

Many utility cooperatives strive to bring the best service at the lowest possible cost, but the high cost of maintaining the infrastructure that is needed to cover large rural areas without the support of large cities as a rich customer base often causes high prices. However, a few such co-ops have managed to tap into urban markets because of growth into previously rural territory served by the co-ops, and they have proven to be very cost-effective. More recently, established energy co-ops have offered with national coverage. Co-operative Energy in the United Kingdom and Enercoop in France are examples of consumer cooperatives. Other co-ops have formed to concentrate on the generation of renewable energy, especially wind energy co-operatives.

Electric cooperatives

North America

Riverland Energy Cooperative near Arcadia, Wisconsin Riverland Energy Cooperative.jpg
Riverland Energy Cooperative near Arcadia, Wisconsin

There are two types of electric cooperatives: distribution cooperatives and generation and transmission (G&T) cooperatives. Distribution electric cooperatives serve end-users, such as residences and businesses, who make up their membership. Generation and transmission cooperatives typically sell wholesale power to distribution cooperatives and are cooperative federations owned by their member co-ops.

Naming

Most electric cooperatives in the United States include the phrase "electric cooperative" in their name, which makes it easy to identify their organization. Most cooperatives have a name that identifies or explains some aspect of their service area. For example, Bluebonnet Electric Cooperative in Texas is named after the Bluebonnet which grows naturally in its service area. Lyntegar Electric Cooperative, also in Texas, is named for the three original counties that came together to organize it, Lynn County, Terry County, and Garza County, and A&N Electric Cooperative in Virginia, is named so because it serves Accomack County and Northampton County. For years after the Rural Electrification Administration was established, many rural residents in the US called cooperatives "REA", regardless of their actual name, and would in turn say they were served by REA instead of the cooperative name if asked who their electric provider was. Today, some cooperatives, either by choice or by the guidance of state charter laws, carry a variation of the cooperative name. These include:

  • Electric Cooperative Association
  • Electric Membership Cooperative (EMC) - used in many states, such as Indiana, North Carolina, Georgia, Tennessee, and Alabama
  • Electric Power Association (EPA) - mainly used in Mississippi
  • Energy Cooperative
  • Power Cooperative
  • Rural Electric Association
  • Rural Electric Cooperative
  • Rural Electric Cooperative Corporation (RECC) - mainly used in Kentucky [4]
  • Rural Electric Membership Corporation (REMC)

Several states have another variation of the utility cooperative, known as Public Power Districts (PPDs) in Nebraska and Public Utility Districts (PUDs) in Oregon and Washington. In both cases, the laws that created these "quasi-cooperative" utilities were created with the specific intent of taking over territory being served by privately owned power companies in those states. Nebraska's conversion from a mixture of power companies serving the state to a public power empire spanned the 1940s (the last privately owned utility line into the state being cut on December 29, 1949), with the creation of the PUDs in the Pacific Northwest starting about the same time and continuing with varying degrees of success over the following two decades. The key difference between a PPD/PUD and a cooperative is that PPDs/PUDs are publicly controlled by residents of a state or local area and run more like a municipal power system than a cooperative system. A cooperative is owned and operated by the customers they serve within their designated service area. Cooperative owners have voting rights to elect the cooperative's board members each year and generally have more say in the operations than other utility forms.

Peer associations

Small cooperatives often band together to achieve economies of scale, share expertise and stand together on regulatory issues. There are several statewide (and in Canada, province-wide) associations of cooperatives, including Kentucky [4] and Nova Scotia. [5] [6] [7] A cooperative of cooperatives, in which several smaller level cooperatives come together to form a bigger higher level cooperative, is called the secondary cooperative. Secondary cooperative is different from the association. Cooperative of secondary cooperative is called tertiary cooperatives. For example, each village may have a village level cooperative. Several village cooperatives may form a district level secondary cooperative in which village level cooperatives have a share. Several district level cooperatives may form a state level tertiary cooperative, and so on.

Europe

In 2013, REScoop, [8] a European federation of energy co-operatives, both producers' and consumers', was launched. It has 11 members in seven countries.

In the UK, Co-operative Energy was established in 2010 by Midcounties Co-operative and supplies electricity and gas across the country.

Philippines

Electricity in most provinces of the Philippines are served by cooperatives, and all belong to the distribution sector, which serve the end customers, who own the cooperative themselves. Electric cooperatives in the Philippines are overseen by the government through the National Electrification Administration (NEA), and rates set by the cooperatives are regulated by the Energy Regulatory Commission (ERC), an agency belonging to the Department of Energy (DOE).

Telephone cooperatives

Telephone cooperatives have today expanded beyond their historical role of providing fixed line telephone services, by also offering broadband and often cable TV services (via DSL, coaxial cable or optical fibre), and mobile/wireless services.

United Kingdom

The UK has a single telephone co-operative, The Phone Co-op, which provides fixed, mobile telephone and internet services, including web hosting and broadband. It is 100% owned by its customer-members who democratically control the business and who share in its profits. The co-op is a social enterprise and was awarded the title of UK customer-facing social enterprise of the year 2015.[1] The business is a living wage employer and is accredited to hold the Fair Tax Mark. It has over 30,000 customers.

United States

There are approximately 260 telephone cooperatives in the US, together employing approximately 23,000 and annual revenues of $3.9B. [9] Many were formed during the New Deal in the 1930s, but some date to the turn of the 20th century. Most operate only one or a small number of exchanges, typically as an Incumbent Local Exchange Carrier (ILEC), but some have become regional players through merger and now operate as Competitive Local Exchange Carriers (CLEC).

See also

Related Research Articles

The United States Rural Utilities Service (RUS) administers programs that provide infrastructure or infrastructure improvements to rural communities. These include water and waste treatment, electric power, and telecommunications services. It is an operating unit of the USDA Rural Development agency of the United States Department of Agriculture (USDA). It was created in 1935 as the Rural Electrification Administration (REA), a New Deal agency promoting rural electrification.

<span class="mw-page-title-main">Public utility</span> Organization which maintains the infrastructure for a public service

A public utility company is an organization that maintains the infrastructure for a public service. Public utilities are subject to forms of public control and regulation ranging from local community-based groups to statewide government monopolies.

<span class="mw-page-title-main">Rural Electrification Act</span> 1936 United States federal law

The Rural Electrification Act of 1936, enacted on May 20, 1936, provided federal loans for the installation of electrical distribution systems to serve isolated rural areas of the United States.

The Chelan County Public Utility District, or Chelan County PUD, provides electric, water, wastewater public utility and telecommunications services in Chelan County, in north-central Washington, USA.

Touchstone Energy Cooperatives is a cooperative federation composed of more than 750 local, consumer-owned utility cooperatives in 46 states in the United States. Touchstone Energy co-ops serve more than 30 million members.

<span class="mw-page-title-main">Great River Energy</span>

Great River Energy is an electric transmission and generation cooperative in the U.S. state of Minnesota; it is the state's second largest electric utility, based on generating capacity, and the fifth largest generation and transmission cooperative in the U.S. in terms of assets. Great River Energy was formed in 1999 when Cooperative Power Association and United Power Association merged.

The Douglas County Public Utility District, or Douglas County PUD, is a public co-operative energy district providing service to Douglas County, Washington. It is owned by its customers and governed by a Board of Commissioners elected by the customer-owners. Though it is not regulated by another governmental unit, a PUD is, by state statute, a nonprofit corporation. PUDs must comply with state regulations for municipal corporations. The local customer-owner of the PUD receives dividends in the form of reduced rates for service.

<span class="mw-page-title-main">Choptank Electric Cooperative</span> Not-for-profit energy organization

Choptank Electric Cooperative is a nonprofit utility cooperative that distributes electricity to rural areas in the Eastern Shore region of the state of Maryland. The cooperative, which was founded in 1938, is headquartered in Denton.

Wiregrass Electric Cooperative is a not-for-profit rural electric utility cooperative headquartered in Hartford, Alabama. It is a member of the Alabama Rural Electric Association of Cooperatives (AREA) and the National Rural Electric Cooperative Association.

The Southern Maryland Electric Cooperative (SMECO) is an electric distribution cooperative which is headquartered in Hughesville, Maryland, United States. SMECO serves approximately 161,000 customers in Calvert, Charles, Prince George's, and St. Mary's counties of southern Maryland. Under its rules as a nonprofit cooperative, SMECO passes on its costs to its customer-members without markup or profit.

This is a list of Electricity distribution companies by country.

West Florida Electric Cooperative, Inc. (WFEC) is a not-for-profit rural electric utility cooperative headquartered in Graceville, Florida. It is a member of the Florida Electric Cooperatives Association, the National Rural Electric Association, PowerSouth Energy Cooperative and the Touchstone Energy Cooperatives alliance.

The National Rural Utilities Cooperative Finance Corporation (CFC) is a member-owned nonprofit cooperative that provides financial products to America's rural electric cooperative network. CFC was established in 1969 to raise funds from the capital markets to supplement the loan programs for electric cooperatives offered by the U.S. Department of Agriculture’s (USDA) Rural Utilities Service (RUS), previously Rural Electrification Administration (REA).

EnergyUnited, based in Statesville, North Carolina, is the largest electric cooperative in North Carolina, serving nearly 125,000 metering points and 105,000 members. It was formed in 1998 by the merger of Crescent Electric Membership Corporation and Davidson Electric Membership Corporation.

<span class="mw-page-title-main">National Electrification Administration</span>

The National Electrification Administration is a government-owned and controlled corporation (GOCC) attached to the Department of Energy of the Philippines tasked in the full implementation of the rural electrification program (REP) and reinforce the technical capability and financial viability of the 121 rural electric cooperatives (ECs).

<span class="mw-page-title-main">Delaware Electric Cooperative</span>

Delaware Electric Cooperative (DEC) is a not-for-profit electric utility based in Greenwood, DE. Delaware Electric Cooperative is a member-owned electric utility powering more than 300,000 people in Kent and Sussex Counties. DEC is a Touchstone Energy Cooperative and a member of Old Dominion Electric Cooperative, an electric generation and transmission cooperative. Through the hard work and committed efforts of its workforce, DEC has – and will continue – to “keep the lights on!”

<span class="mw-page-title-main">Renewable energy cooperative</span>

A renewable energy cooperative is a decentralized, non-governmental initiative of local communities and citizens to promote the production and consumption of renewable energy. It is formed by a group of community members that share a common long-term goal for a sustainable future of energy and work to advance the transition through active citizenship involvement. In this way, the citizens are prosumers: they act as both producers and consumers in an attempt to democratize energy supplies by shifting away from relying on large companies.

<span class="mw-page-title-main">Willie Wiredhand</span> Fictional character

Willie Wiredhand is the cartoon mascot of the National Rural Electric Cooperative Association, created in 1950 and still in use by co-op electricity companies. His head is a lightbulb socket, his body is a wire, and his hips and legs are a two-pronged power plug. Willie was created as a rival for the corporate Reddy Kilowatt, which led to a lawsuit in 1956 alleging trademark infringement; the case was resolved in Willie Wiredhand's favor and Willie was granted his own trademark in 1957.

References

  1. "Explanation of Patronage or Capital Credits". Archived from the original on 2009-08-11. Retrieved 2009-07-07.
  2. Operation Roundup
  3. "Rural Electrification". Archived from the original on 2009-01-30. Retrieved 2009-02-11.
  4. 1 2 "Electric Cooperative FAQ - KAEC". Archived from the original on 2011-11-22. Retrieved 2011-11-16.
  5. "Department of Energy and Mines |". energy.novascotia.ca. Retrieved 2019-11-12.
  6. "NS News and Trends - Professional Online Magazine News And Trends".
  7. "Berwick 'Three - Stars' 1933 - 1936 Western Nova Scotia Junior Hockey Champions - Town of Berwick".
  8. REScoop
  9. "Rural Telephone Cooperatives". Economic Impacts of Cooperatives. University of Wisconsin Center for Cooperatives. Retrieved 7 June 2014.