Cumberland Electric Membership Corporation

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Electric Cooperatives

The Electric Cooperative Network: A Brief History

Today, the rural electric cooperatives are a significant part of the electric utility business. They operate more miles of electric lines than the combined totals of all other electric utilities in the country.

In 1935, President Franklin D. Roosevelt created, by executive order, the Rural Electrification Administration (REA). The following year, by act of Congress, the agency took on permanent life. The goal of the REA was to provide electric power to rural America, but its method was to be indirect.

Functioning as a loan agency, the REA provided financing for the effort. The actual implementation was to be done by local people through cooperatives, which they organized for the purpose.

In 1935, only 11 percent of the rural homes in America had central station service. Almost one thousand rural electric cooperatives, which owe their existence to the REA, have electrified nearly the entire rural area of the United States. This accomplishment, more than any other one factor, closed the cultural gap, which existed between rural and urban life.

The Cooperative Network

In order to compete in a restructuring industry, cooperatives may be organized to provide just about any good or service that consumers may require. Consumers may select from a wide array of services provide through cooperatives, knowing that these services will be both dependable and cost-efficient.

Over 100 million people are members of 47,000 U.S. cooperatives. These people have organized to provide themselves with goods and services in nearly every sector of our economy. Almost all consumer needs can be met by a cooperative.

Caring for Communities

NRECA, the national organization representing the national interests of the cooperative electric utilities and the consumers they serve, was founded in 1942. NRECA was organized specifically to overcome World War II shortages of electric construction materials, to obtain insurance coverage for newly constructed rural electric cooperatives, and to mitigate wholesale power problems. Since those early days, NRECA has been an advocate for consumer-owned cooperatives on energy and operational issues as well as rural community and economic development.

NRECA has nearly 1,000 member electric cooperatives that provide electric power to 35 million people in 46 states. Most of the 865 distribution systems are consumer-owned cooperatives; some are public power districts.

Why Cooperatives Are Special

Cooperative businesses are special because they are owned by the consumers they serve and because they are guided by a set of seven principles that reflect the best interests of those consumers.

More than 100 million people are members of 47,000 U.S. cooperatives, enabling consumers to secure a wide array of goods and services such as health care, insurance, housing, food, heating fuel, hardware, credit unions, child care or utility service.

All cooperative businesses adhere to these seven guiding principles:

Voluntary and Open Membership — Cooperatives are voluntary organizations, open to all persons 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, if any, on capital subscribed as a condition of membership.

Members allocate surpluses for any or all of the following purposes: developing the cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the 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 sustainable development of their communities through policies accepted by their members.

This information courtesy of the NRECA
*FDR photo courtesy of the East River Electric Power Co-op in Madison, SD

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