Published on November 11th, 2019 | by John Farrell0
A New Deal For Electric Co-ops: How Members Can Exercise Ownership To Strengthen Democracy
November 11th, 2019 by John Farrell
Originally published on ilsr.org.
While most Americans get their electricity from a private company, about 1 in 8 Americans actually own their utility as a member-owner of a rural electric cooperative.
For this episode of the Local Energy Rules Podcast, host John Farrell speaks with Liz Veazey, Network Director of We Own It, and Chris Woolery, Residential Energy Coordinator at the Mountain Association for Community Economic Development. Veazey and Woolery, along with a team organized by the New Economy Coalition, have just released the Rural Electric Cooperative Toolkit. This toolkit opens with this statement: “You have a voice in your electric cooperative. Here’s how to use it.” In the interview, Veazey and Woolery talk about the wealth of knowledge found in the toolkit and why members need these organizing strategies to make cooperative electric companies more responsive to their communities’ interests.
Listen to the full episode and explore more resources, below — including a transcript and summary of the conversation.
The Rural Electric Cooperative
With more land to cover and fewer customers to serve, electrifying rural areas was not attractive to investor-owned utility companies. For this reason, while cities were getting electricity in the early 1900s, rural areas remained without. This changed when Franklin Roosevelt created the Rural Electrification Administration in 1935. This New Deal administration gave rural areas loans to electrify their communities on their own, through cooperatives.
Cooperatives formed as electric utilities with a different business structure: member ownership. Member owners could use the cooperative to deliver services their communities wanted, like electricity (and even internet). However, Veazey notes that the founding community members were often white, land-owning men — a legacy that continues to define co-ops today. Electric cooperatives are still significant electric distributors, with 900 rural co-ops serving 42 million people.
All co-operatives, including electric co-ops, operate by seven principles:
- Open and voluntary membership
- Democratic member control
- Members’ economic participation
- Autonomy and independence
- Education, training, and information
- Cooperation among cooperatives
- Concern for community
These principles give rural electric co-ops the potential to do a lot of good in their communities, according to Veazey:
I think there’s huge potential for these co-ops to be drivers of a new economy, including increasing access in their communities to energy efficiency, to local renewable energy, broadband, and more. – Liz Veazey
Formerly a member-owner of a rural electric co-op, Woolery discusses his own experience constructing Energy Star homes in central Kentucky. It was only with the help of the local co-op that he was able to get his first house certified.
It was the rural electric co-ops that did that for me. – Chris Woolery
Woolery also campaigned with other member-owners against a new coal-fired power plant near their homes. Now, as a customer of an investor-owned utility, Woolery realizes he has lost his voice.
Co-ops Can Do Better
Many co-ops strive to better serve the needs of members. However, many more are doing very little. Some members do not know that they are the owners of an electric utility. In a few cases, the co-op works hard to keep things that way.
Some of the co-ops are actively working against member engagement and participation. – Liz Veazey
In 2016, ILSR found that “more than 70 percent of cooperatives have voter turnouts of less than 10 percent.” At the same time, Veazey describes how co-op boards have become entrenched; the same members serve on the board year after year, some passing the position down through generations. Board members are being rewarded for low member engagement with re-election. If board members serve decades-long terms, and pass the position on to family members, the current board will look very similar to the white men that founded the co-op in the 1930s — even if the membership is much more diverse in its appearance and interests.
One un-democratic policy that causes the entrenchment of co-op boards is proxy voting. Some co-ops allow, or encourage, members to designate their vote to a proxy (the board of directors). This often leads to incumbent board members effectively using members’ designated votes to protect their own seats. Veazey hopes that states will step in and prohibit proxy voting.
Sometimes local media reinforces the power of the incumbent board by refusing to cover corrupt practices (if there is local media outlet at all). Veazey shares this story published in The State, which illustrates some of the corruption that occurred in South Carolina co-ops. When the local news is connected to the co-op, Veazey says it takes an outsider — like the state news, or a group like One Voice — to investigate and expose co-op mismanagement.
When member-owners do not feel represented by the board, they will be disenfranchised and disengaged from the process, leading to less democratic member control (the second principle of cooperatives).
I think there’s opportunities to help co-ops better live up to some of these principles. – Liz Veazey
Giving Members the Tools to Take Ownership
Rural electric cooperatives serve 90% of persistent poverty counties in the US, says Woolery. Subsequently, engaging with the co-op may not be one of these members’ top priorities. Woolery hopes that the toolkit will help people maximize the time that they do have to create meaningful change in their co-ops. After all, it will be up to each co-op to create change in its own unique circumstances.
If you know one co-op, you know one co-op. – Chris Woolery
Models of Co-op Democracy
Veazey and Woolery hope that the toolkit, with its many success stories, inspires co-op members to make their co-ops better.
One rural electric co-op success story Veazey mentions is Roanoke Electric. In North Carolina, the community organized for years to change up the board membership. Members wanted to elect a board that represented the community’s interests. When they successfully elected new board members, the board hired Curtis Wynn as CEO — one of the first black CEOs of an electric company. Thanks to the leadership of Wynn and the drive of the members, Roanoke now has on-bill energy efficiency financing, community solar, broadband internet, and a program to address periods of high energy use (to help lower costs for all members).
Next, Veazey mentions Ouachita Electric in Arkansas. Ouachita has brought broadband internet to its members, in addition to the energy efficiency/clean energy work it does through inclusive financing.
For more on Ouachita’s work on energy and broadband, see our 2017 post.
Kit Carson Electric in New Mexico has a different kind of success story. Only a distribution co-op, Kit Carson actually got its power from the larger “co-op of co-ops” Tri-State Generation and Transmission Association. Unsatisfied with Tri-State, Kit Carson bought itself out of the contract. The co-op found that self-determination was more valuable than 37 million dollars. Soon, Kit Carson expects to be 100% solar powered during the day.
Listen to Luis Reyes, CEO of Kit Carson, talk about the co-op’s democratic efforts in this podcast.
I think we can see when people really take seriously the cooperative principles and values serving their members. There’s lots of really amazing things that they can bring to their communities. – Liz Veazey
A common thread in each of these stories in on-bill financing. This policy, also known as inclusive financing, allows energy users to pay for efficiency upgrades through small payments on their monthly bill. In many cases, the energy savings from the upgrades may even pay for them. Offering energy efficiency, or even renewable energy, in this way opens the door to people who would not be able to pay in one lump sum. It also allows renters to take part, since the bill can stay with the property.
This is not a silver bullet by any means, but when you can give folks access to financing for residential efficiency programs, it’s like a silver BB in rural Kentucky… Why isn’t everybody doing this? – Chris Woolery
Where Should Co-op Members Start?
Each guest had advice for co-op member-owners who want to better their electric cooperative.
First, check out the Rural Electric Cooperative Toolkit. Then, Veazey suggests that co-op members get together to find a shared issue. To inform the campaign, members can talk to the co-op and check the co-op’s website. Finally, Veazey encourages aspiring organizers to connect with her at firstname.lastname@example.org, or through the We Own It network.
Woolery had similar advice, saying that the first thing to do (after being inspired by the toolkit) is to make local connections. There may be people already doing the work in the area to join, like Kentuckians for the Commonwealth, Appalachian Voices, or Iowa Citizens for Community Improvement.
Those success stories are great inspiration, and get your wheels turning to figure out what your community needs and to know that it is doable. – Chris Woolery
Explore the New Economy Coalition’s Rural Electric Cooperative Toolkit
Resources for even more context on the story:
- ILSR’s 2016 report on rural electric cooperatives: Re-Membering the Electric Cooperative
- ILSR videos, podcasts, and reports on inclusive financing
For concrete examples of how cities can take action toward gaining more control over their clean energy future, explore ILSR’s Community Power Toolkit.
Explore local and state policies and programs that help advance clean energy goals across the country, using ILSR’s interactive Community Power Map.
This is the 89th episode of Local Energy Rules, an ILSR podcast with Energy Democracy Director John Farrell, which shares powerful stories of successful local renewable energy and exposes the policy and practical barriers to its expansion.
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