Rural Electric Cooperatives: Sparking Energy Democracy
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By Amelia Marsh
Introduction: What is an electric cooperative?
If you’ve ever joined a grocery store co-op, you are familiar with the cooperative as an organizing structure. Co-ops have deep roots in American rural society and the populist movement of the late 19th century, which led to the development of decentralized organizations like The Grange. The Grange supported rural communities by communally organizing sales and profits of goods including wheat, wool, and tobacco, and created communal stores for their members. While cooperatives are not necessarily non-profits, their profits/dividends are supposed to be returned to members, and they aim to follow the seven cooperative principles: (1) open and voluntary membership, (2) democratic member control, (3) member’s economic participation, (4) autonomy and independence, (5) education, training, and information, (6) cooperation among cooperatives, and (7) concern for community.
Electric cooperatives are a unique model, which developed during the Great Depression. In the early 1930s, most cities were served by utility companies. However, only 1 in 10 rural homes had electricity. Electric companies did not want to invest in running lines to rural communities, so the federal government stepped in. The Tennessee Valley Authority Act of 1933, Executive Order No. 7037, and the Rural Electrification Act of 1933 were enabling legislation that allowed groups, often of farmers, to come together to purchase energy. These acts provided the loans for Rural Electric Cooperatives (RECs) to get off the ground and build the transmission infrastructure necessary to spread electricity throughout our nation. Today, about 42% of American transmission lines are maintained by co-ops, and more than forty million energy customers receive their electricity from co-ops. Electric co-ops are owned by their customers, who have the title “members,” and utilize a one-member, one-vote model.
Democratic Control?
While RECs emerged from the movement for more democratic control of resources, they are not always democratic in practice. Unlike other co-ops, electric co-ops are non-profits. As a result, they are often not subject to state-level regulation. This lack of oversight has led to power accumulation and undemocratic practices by co-op board members, who are often composed of “old boys clubs.” For instance, member-owners of Alabama’s Black Warrior Electric Membership Corporation organized to attend their cooperative’s annual meeting, but when they arrived, the board members immediately called the meeting to a close. An estimated 60% of Black Warrior’s member-owners are Black, but the co-op has never had a black board member. A lack of democracy on REC boards has a variety of interwoven impacts, from wasteful spending to a failure to pay member-owners their mandated dividends to slow uptake on programs that support energy efficiency and the development of clean technologies.
However, there has been movement on the democratization of these co-ops. Organizations like the New Economy Collective have developed a toolkit for rural member-owners to organize within their REC. In South Carolina, member-owners voted out board members who had refused to hold public meetings and overpaid themselves for their part-time roles. Other member-owners have taken action to stop their cooperative from developing coal plants and invest in solar instead. These efforts specifically underscore the intersections between the development of truly democratic REC leadership and subsequent investments in renewable technology, which are a second area of opportunity for RECs.
Electricity Co-ops, Generation & Transmission Coops, and the Renewable Energy Transition
Because electric co-ops’ only ostensible goal is benefiting their customers, they can be on the cutting edge of the clean energy transition. This means they can invest in solar and wind arrays, energy efficiency programs, and developing favorable net-metering regulations for solar homeowners.
However, even if the boards of RECs want to invest in renewables, they are not completely free to do so. Most regional electric cooperatives contract to receive their energy from larger generation and transmission (G&T) cooperatives, who have historically been some of the most coal-centric utilities in the country. Even if a small REC wanted to build solar arrays or otherwise invest in direct renewables generation, many REC contracts with G&Ts limit the amount of local energy that the smaller RECs can generate on their own.
In 2016, frustrated by their G&T co-op’s 5% cap on locally generated energy, New Mexican electric co-op Kit Carson exited their contract with Tri-State, paying a $100 million exit fee. They are not the only co-op seeking to cut ties with Tri-State, which is a wholesale power provider for electricity cooperatives in Colorado, Wyoming, New Mexico, and Nebraska. Tri-State’s largest member, Colorado’s United Power, also recently announced that they plan to exit.
These upheavals in the market came even after the Federal Energy Regulatory Council ruled that another Tri-State customer was allowed to make purchases outside of the 5% cap and Tri-State unveiled their Responsible Energy Plan in 2020. This plan included more flexible purchasing agreements and the commitment to provide 50% renewable electricity to their customers by 2030. Furthermore, on a national scale, co-ops have reduced their carbon dioxide emissions by 23% between 2005 and 2020 and reduced the coal in their energy mix from 54% to 32% between 2014 and 2019, although they have expanded their natural gas use from 18% to 32% in that same time frame. These actions and statistics indicate that some RECs are serious about sparking the renewable energy revolution, based on the democratic desires of their members.