POWERING A NEW ECONOMY:
RECLAIMING RURAL ELECTRIC CO-OPS
This article was originally published for New Economy Week, November 12 2015
By Jake Schlachter, Founder, We Own It
In the U.S., 29,000 seeds for a new economy are hiding in plain sight. They are the cooperatively-owned businesses in every community: credit unions, rural electric utilities, grocery stores, housing developments, and worker-owned businesses of all stripes.
A cooperative is a democratic association that owns and controls a business, either non-profit or with any profits returned to members.
At its core are universally recognized values, including justice, equity, democratic participation, and concern for community. Each cooperative is owned by its members and governed by a democratically elected board. That means every member has a right to vote on corporate leadership, and they have a stake in the performance of the business.
The U.S. cooperative sector at minimum has $3 trillion in assets, $650 billion a year in revenue, employs nearly a million people, and counts 130 million Americans as members. Co-ops are everywhere. They serve both urban and rural members and enjoy bipartisan political support. Co-ops are the new economy businesses already present in the old, and a just transition to energy democracy and climate justice runs through them.
Imagine a map of the United States. Now fill in three quarters of it, with extra emphasis on the Southeast, Midwest, and Rocky Mountain West, and you’d have a good idea of where the local utility and power plants are cooperatively owned.
Nearly 900 electric cooperatives cover 75% of the U.S. and sell $40 billion of electricity a year to their 42 million owners. The federal government worked with local communities to start cooperatives during the New Deal in order to bring electricity, and with it, economic opportunity, to people in rural America whose needs were ignored by the for-profit utilities. Americans came together to build their own utilities, using a business model that has always been focused on empowering people to solve their own problems.
Today, the need to empower people left out of our investor-owned economy is greater than ever before, and co-ops are once again the engine of change. Electric co-ops, in whole or in part, serve over 90 percent of the poorest U.S. counties, making co-ops key to both energy democracy as well as creating an economy that works for all.
Fortunately, rural electric service territory is also ripe for solar and wind energy development. New investments in local energy generation actually lower members’ rates and keep their dollars in the community while creating locally based jobs, as do investments in mass-scale energy efficiency retrofits, ensuring that the benefits of investment are shared in equitably by the community.
These investments have the further benefit of saving members money and reducing the demand for far-away coal. Investing in members' ownership of local solar also allows co-op members to participate in the energy economy as producers, selling power from their land and their slice of the sun to their neighbors.
These ideas resonate across the political spectrum, and co-op members all over the country are clamoring for these opportunities. Some forward-thinking co-ops are already shifting courses to adapt. In order to spur faster changes, in 2013 the National Rural Electric Cooperative Association (NRECA) released a report entitled "The Electric Cooperative Purpose: A Compass for the 21st Century” in which industry thought-leaders identified the biggest challenge to the future of co-ops: a lack of engagement with members causing slow adaptation to changes in what members want and where the market is going.
But many co-ops are not responding to their members or to market changes. Members of these co-ops are left to 3rd party solar providers backed by financial giants on Wall Street, creating the first competitive threat that the utility co-ops have ever known. Combined with over-investment in coal power plants and mines (about three-quarters of co-op power is currently from coal), too many co-ops are left vulnerable by holding the wrong energy portfolio for the future.
Rather than leading efforts to create new economic opportunities for their members from fossil fuel divestment and reinvestment, the national and state lobbies are doubling down on coal and resisting efforts to transition to cleaner power, including massive opposition to the Clean Power Plan.
The compass report from NRECA called on electric co-ops to embrace, adapt to, and lead the future, and reimagine their cooperative purpose as service to members and their community. It also warned that, unless members were willing to re-engage with their co-ops to lead these changes, inertia and status quo interests would cause many co-ops to fail to respond before the changing market and new competition put them out of business.
That would be an enormous loss for rural America, and for society at large. If we are ever to successfully build a new economy, the 29,000 co-ops and their 130 million owners are crucial to the movement. With co-ops and their members in virtually every community and elected office holders’ district, the co-ops formed by earlier generations of visionaries may prove to be the tip of the spear in an effort to transform our economy. We need our co-ops to be vibrant and growing for the long term, especially the electric co-ops, and that means being a part of the change process and reimagining new business models that embrace new opportunities.
We've seen what can happen when a co-op's members are empowered to lead. To choose a single example from many, the Pedernales Electric Cooperative, near Austin, Texas, has gone from worst to first, thanks to a two-year campaign started by members in 2007 to vote in a new board of reformers. Many of the old directors had been in place for decades and over time had begun voting themselves compensation in the hundreds of thousands of dollars for their "service" - undisclosed and all paid for from the owners' electricity bills. The reform candidates led a five-year effort to clean house, enact a Members’ Bill of Rights, and investigate the previous regime, leading to the conviction of the former CEO for money laundering. Pedernales's new board has also adopted a requirement to use 30% renewable energy by 2020 - a more ambitious commitment to clean energy than could likely have been passed through a legislative mandate, made voluntarily by the co-op, because that's what its members wanted.
The story of Pedernales tells us how co-ops could be the way that average citizens regain their voice when government and markets fail them. Co-op members across the country are beginning to hear the call to reconnect with the businesses they own, and forward-thinking co-ops are embracing this interest and seeking new ways to engage their members.
From conversations that first started at conferences of the New Economy Coalition and the National Cooperative Business Association, a group of cooperative business leaders, organizers, rural economy champions, and clean energy advocates are now developing a new initiative called We Own It to foster this movement. We hope you join us.
Our mission is to help co-op members to re-engage with the businesses they own and help co-ops navigate the complexity of the changing landscape. When co-ops are connected to an empowered and engaged membership, these seeds can grow to their full potential as anchor institutions for building local community resilience and the foundation of a new, cooperative economy.