Why Aren’t Rural Electric Cooperatives Champions of Local Clean Power?

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Originally published on ilsr.org.

When it comes to ownership, there are few better structures for keeping a community’s wealth local than a cooperative. So why is it that America’s rural electric cooperatives are tethered to dirty, old coal-fired power plants instead of local-wealth generating renewable power?

There are a lot of answers to this question, but it might start with this: electric cooperatives aren’t quite like other cooperatives.

The Seven Slipping Cooperative Principles

Cooperatives around the world adhere to the “Seven Cooperative Principles,” but electric cooperatives (at least in the United States) fail on several of these principles.

  1. Voluntary and open membership. Nope. If you want electric service in cooperative territory, you sign with the cooperative. While it’s no different than rules for other types of utilities in the 30 states that grant utilities a monopoly service territory, it violates the principles of cooperatives.
  2. Democratic control (one member, one vote). Not always. Some electric cooperatives award one vote per meter, and some customers (e.g. farmers, industry) have more than one meter. Furthermore, many cooperatives filter potential board candidates with “nominating committees.” And look, here’s a board election with no opposition!There’s also a big gap between cooperative member support for (paying more for) renewable energy and cooperative behavior. This 2013 survey in Minnesota, for example, shows little separation between urban and rural areas (where cooperatives are dominant) in support for renewable energy, yet cooperatives opposed every bill favoring clean energy in the 2013 legislative session.
  3. Members control the capital of the cooperative.
  4. Cooperatives maintain their autonomy and independence even if they enter into agreements with other entities. Questionable. Many cooperatives sign 40- or even 50-year purchase contracts with power suppliers to supply 95% of their entire sales, mostly from coal-fired power plants. Standard and Poor’s explains this in an evaluation of a Seminole Electric in Florida, a generation & transmission cooperative that sells to rural cooperatives. In their words, one of the utility’s credit strengths is, “A captive retail market and the ability to set rates through take-and-pay, all-requirements wholesale power agreements with nine of 10 members through 2045.”
  5. Cooperatives provide educational opportunities to their members and the public on the benefits of cooperatives. Questionable. If you read rural electric cooperative newsletters, you’ll hear a lot about climate change but you’ll often find the phrase in quotes
  6. Cooperatives work best when cooperating with other cooperatives. Questionable, refer to #4. Some of these power suppliers are “co-ops of co-ops,” but these long-term contracts have tethered the economic fortunes of cooperative members to the vagaries of the coal market (see below). More than any other type of utility (public or investor-owned), rural electric cooperatives are reliant on coal for their electricity fuel. The average U.S. utility is 38% coal-fired power.rural electric cooperatives reliant on coal - public citizencoal prices 2000-11.001
  7. Cooperatives work for sustainable development of their community. Not enough. Most cooperatives rely heavily on imported power purchased on long-term contracts with the goal of cheap power, but that ironically leave them at the mercy of unfettered price increases. They also have missed an enormous economic development opportunity from renewable energy. For example:Renewable energy provides significant economic impacts ($1 million per megawatt of wind, $250,000 per megawatt for solar) with multipliers for local (i.e. cooperative) ownership (up to 3.5 times more local economic impact, and twice as many jobs). Wind and solar provide more jobs per megawatt of power capacity, as well.RE-fossil-jobs-per-MWFinally, rural electric cooperatives have organized a 1 million comment campaign against EPA regulations of carbon pollution from power plants. Hardly a commitment to “sustainable development.”

How Can Cooperatives Change?

Restoring their 7 principles could do a lot. Improving their structure so that the cooperative directors reflect member opinion on renewable energy would restore the principle of democratic control. Avoiding ridiculously long power purchase contracts would provide local cooperatives with real autonomy and control of their energy costs and options. Broadening their focus on economic development beyond cheap power to include renewable energy would make “sustainable development” much more realistic.

Can it happen? It already has, in Iowa and on Kaua’i, and there are more tools that ever at their disposal. But as with electrification, no one will do it unless they do it themselves.

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John Farrell

John directs the Democratic Energy program at ILSR and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. His seminal paper, Democratizing the Electricity System, describes how to blast the roadblocks to distributed renewable energy generation, and how such small-scale renewable energy projects are the key to the biggest strides in renewable energy development.   Farrell also authored the landmark report Energy Self-Reliant States, which serves as the definitive energy atlas for the United States, detailing the state-by-state renewable electricity generation potential. Farrell regularly provides discussion and analysis of distributed renewable energy policy on his blog, Energy Self-Reliant States (energyselfreliantstates.org), and articles are regularly syndicated on Grist and Renewable Energy World.   John Farrell can also be found on Twitter @johnffarrell, or at jfarrell@ilsr.org.

John Farrell has 518 posts and counting. See all posts by John Farrell

6 thoughts on “Why Aren’t Rural Electric Cooperatives Champions of Local Clean Power?

  • This post is right on target. GRE in MN is tied to coal fired production and supplies electricity to many smaller “CoOps”. The board of my local cooperative is made up of a bunch of fossils who think electricity can only be generated by burning coal and electricity from wind or solar is WAY too expensive. They are fed this line by the local system manager whose primary intent is to maintain the status quo. They are now reluctantly putting up 20 KW worth of solar panels as greenwash to satisfy a recent state legislative mandate.

  • Contrast Germany, where rural cooperatives have played a key part in wind development.

    • The same can happen here in the US. Transmission gate keepers, private generators (fossil fuel) and politics have kept wind power potential as potential. See my comment above or below on a planned transmission line.

  • Not so fast with the dissing of Co-ops. Many co-ops are a result of Rural Electrification of America starting in the 1930s. Many co-ops are situated in the great plans from Montana to Oklahoma.

    “Power line to move Iowa wind energy into Chicago wins key nod”


    This will bring Iowa and hopefully other wind projects along the wind belt to Chicago. Chicago, by the way is a electricity sucking machine. Exelon (ComEd) isn’t happy. Rural co-ops are going to be happy. This is a 3500 MW line. It would allow for wind generated electricity to go as far east as New Jersey.

  • The Sacramento Municipal Utility District is member-owned non-profit utility. It is the best utility in the US, year after year, and has the best satisfaction of its ratepayer. It is the best role model of how utility cooperatives should be. Look no further! I never recalled any article in CleanTechnica featuring this leading
    edge utility when it comes to the renewable energy projects. It is leading and surpassing California’s mandate for renewable portfolio.


    • Fully agree! SMUD is the renewables champion among electric utility cooperatives and should be featured in CleanTechnica.

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