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About Cooperatives |
Utility CooperativesConsumer-owned cooperatives play a key role in providing affordable utility services across both rural and urban America. There are three primary types of utility co-ops: electric co-ops, telecommunications co-ops, and water cooperatives. The federal government provides resources to support rural utility cooperatives through U.S. Department of Agriculture loan and technical assistance programs. Electric cooperatives are owned by the consumers who buy power and other services from the co-op. Typically organized as non-profits under state law, they provide at-cost electric service. Like other cooperatives, they are governed by a board of directors elected by and from within their membership. They return any revenue surpluses, after investment in the utility, to their members in the form of reduced rates or retained earnings (known as "capital credits"), which are periodically rotated out of the cooperative to its consumer-owners. Electric cooperatives formed in the early 1900's to provide electricity to rural areas that investor-owned utilities would not serve. Rural areas, with few customers per mile of line, were considered insufficiently profitable by for-profit utility providers. There are two primary types of electric cooperatives—
Electric co-ops own and maintain some 2.3 million miles of electricity distribution lines—or 43 percent of the nation's lines-and cover 75 percent of U.S. land mass. They operate primarily in rural areas, serving fewer than seven consumers per mile and collect just $8,500 in revenue per mile of line. By contrast, investor-owned and publicly owned utilities average 34 and 44 customers per mile of line and collect $59,000 and $72,000 per mile of line, respectively. For more information about electric cooperatives, visit the National Rural Electric Cooperative Association. Urban Electric Cooperatives Some electric and energy cooperatives operate in urban areas as well. They amass the purchasing power of their urban consumer-members to negotiate reduced rates from investor-owned or publicly owned electricity providers. A notable example is: The Energy Co-op The Energy Co-op is a nonprofit, member-owned cooperative with over 6,500 members throughout Southeastern Pennsylvania. It combines the buying power of its residential and small business members to negotiate favorable prices for electricity. The co-op formed in 1979 to provide consumers with savings on home heating oil. The co-op also emphasizes access to renewable energy. For more information, visit The Energy Co-op.Touchstone Energy® More than 600 electric cooperatives are members of Touchstone Energy®, a national branding alliance of local, consumer-owned electric cooperatives dedicated to providing high standards of service to customers, active in their local communities, and committed to charitable giving and meeting other community needs. For more information, visit Touchstone Energy Cooperatives. Telecommunications Cooperatives Throughout rural America, telecommunications cooperatives provide local and long distance telephone, Internet, and satellite television services to their consumer-owners. Rural telephone cooperatives formed in the early 1900's to provide telecommunications services in rural areas that were considered unprofitable by for-profit companies. According to the U.S. Department of Agriculture, in 1949, only 39 percent of rural residents and farms were receiving telephone service of any kind. Today, rural telephone co-ops serve millions of Americans, offering local exchange services, Internet access and other telecommunications services to their consumer-owners. For more information on telephone cooperatives, visit National Telecommunications Cooperative Association. The National Rural Telecommunications Cooperative (NRTC) is a co-op, owned by its member utilities, providing advanced telecommunications and information technology to its more than 1,000 members in 46 states. It helps rural electric and telephone utilities strengthen their businesses by providing them access to long distance services, broadband access, satellite television and other advanced telecommunications services that allow rural utilities to meet the needs of their customers. NRTC helped launch the nation's first, high-power direct broadcast satellite (DBS) system. It is the leading distributor of satellite television service and hardware to rural America, reaching more than 1.7 million rural consumers-nearly 20 percent of all DIRECTV subscribers. For more information visit NRTC. In some rural communities, particularly in the rural West, community or member-owned cooperatives provide water and/or wastewater services on an at-cost basis. Though less common than electric or telecommunications cooperatives, water co-ops serve their members on a non-profit basis. Though frequently known as rural water associations, many of these organizations function as cooperatives. For more information on rural water associations, visit the National Rural Water Association. Public Resources for Utility Cooperatives The U.S. Department of Agriculture's Rural Utility Service operates several loan and loan guarantee programs to help strengthen rural electric and telecommunications cooperatives, and rural water and wastewater systems. RUS's electric program provides loans and guarantees to finance construction of new, and improvement of existing, distribution, transmission and generation facilities and support energy management, conservation, and renewable energy programs. The agency's telecommunications program provides traditional infrastructure loans and guarantees to cooperatives and other rural telecommunications providers, and provides financing for advanced telecommunications services such as broadband Internet service. RUS is a partner in the Rural Telephone Bank, which provides telephone co-ops with access to private capital. For more information, visit the Rural Utilities Service. |
