The Story of Electric Cooperatives
Power travels a long way to get to your house and an electric utility is the company that makes sure it gets there. There are a few different kinds of electric companies:
Cooperatives
(or co-ops) supply power to homes, businesses and farms in rural and suburban areas. Co-ops are owned by the customers they serve.Investor-owned utilities
(or IOUs) are usually very large and provide power to millions of homes and businesses. They are owned by stockholders, who may not be customers of the IOU.Municipal utilities
supply power to only the buildings inside their town or city limits. They are owned and operated by that town or city’s government.
In the 1930s, hardly anyone living in rural areas had electricity, but almost everyone living in the cities had power. This happened because the investor-owned utilities (IOUs) who supplied power to more populated areas, didn’t think their companies would make any money if they supplied the countryside. They thought it would take too much money to build power lines in those rural areas when they would only serve a small number of customers.
In 1935, the 32nd President of the United States, Franklin D. Roosevelt, created the Rural Electrification Administration (REA). This government agency offered financing and professional help to farmers and small-town residents who banded together to form electric cooperatives.
Each neighbor became a consumer-member of the new co-op, meaning they were not just a customer, but also a co-owner of the company.
Co-ops Helping Co-ops
The REA sent electrical engineers and other professionals to these rural areas and helped the communities build utility systems on a standard design. Because all co-ops had very similar facilities and equipment, co-ops could help each other bring the power back on when severe storms created huge, widespread blackouts. That tradition of cooperatives helping cooperatives continues today. When Hurricane Isabel hit the United States coast in 2003, many co-ops in eastern Virginia suffered huge outages. Co-ops from all over the state and even from other neighboring states sent workers to help bring the power back on.
Capital Credits
Another quality unique to co-ops is capital credits. Because customers also own the co-op, they are entitled to some of the profits. When a cooperative makes a profit after they pay the costs of running the business, they set aside money to go back to the consumer-members. Customers might only get a few dollars back each year, but if they were customers of an IOU or municipal utility, they wouldn’t get one penny back! If you are a customer of the same electric co-op for a long period of time, you might actually get a pretty big sum back—maybe even enough to pay for a whole month’s worth of electricity!
Electric Cooperatives Today
A lot has changed since 1935, but today’s electric co-ops still operate to benefit their consumer-members. Currently, there are more than 900 electric cooperatives in the United States, serving over 37 million people. Co-ops are now so diverse that some have only a few thousand customers, while some serve nearly 200,000 members in areas that are no longer very rural.
There are two electric cooperatives in the State of Maryland. They are Choptank Electric which serves over 46,000 members in all nine counties of Maryland’s Eastern Shore and Southern Maryland Electric Cooperative which serves over 131,000 members in Calvert, Charles, Prince George’s and St. Mary’s counties.
Co-ops in Every Industry
Electric co-ops aren’t the only type of cooperatives. In fact, co-ops have been created in nearly every industry all over the world. Some are names of brands you see regularly in the supermarket, like Ocean Spray which is a cooperative of cranberry growers. Others are less familiar but no less important, like Group Health Cooperative which provides healthcare coverage to thousands of people.
Guiding Principles
All co-ops, no matter what industry they serve, are guided by seven important principles:
Voluntary and Open Membership• Cooperatives are voluntary organizations, open to all people able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political, or religious discrimination.Democratic Member Control• Cooperatives are democratic organizations controlled by their members, who actively participate in setting policies and making decisions. The elected representatives are accountable to the membership. In primary cooperatives, members have equal voting rights (one member, one vote) and cooperatives at other levels are organized in a democratic manner.Members’ Economic Participation• Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. Members usually receive limited compensation (capital credits), if any, on capital subscribed as a condition of membership.Autonomy and Independence• Cooperatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy.Education, Training, and Information• Cooperatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their cooperatives. They inform the general public, particularly young people and opinion leaders, about the nature and benefits of cooperation.Cooperation Among Cooperatives• Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.
Concern for Community
While focusing on member needs, cooperatives work for the positive development of their communities through policies accepted by their members.
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