Thursday, 12 December 2013 15:06

Utility

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A utility cooperative is tasked with the delivery of a public utility such as electricity, water or telecommunications. Many such cooperatives exist in the rural United States, where the nearest investor-owned utility would not provide service. When designing utility distribution, the key factor to consider is that low-density rural systems (in which there are few paying customers per mile of infrastructure) are generally not profitable enough to attract investor-owned utilities.

For this reason, roughly three quarters of the United States’ landmass is powered by electric co-ops; for-profit power companies believed there would be insufficient revenue to justify the capital expenditures required.

Because they work in an industry in which maintenance and modernization is essential, utility co-ops have often organized among themselves. For example, the National Rural Utilities Cooperative Finance Corporation provides financial services to electric and telecommunications co-ops. 

Electric

Electric cooperatives first formed in the early 1900's to provide electricity to rural areas that investor-owned utilities would not serve.  For-profit utility providers considered rural areas, with few customers per mile of line, insufficiently profitable.

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.

There are two types of electric cooperatives, distribution cooperatives and generation and transmission (G&T) cooperatives. Distribution electric cooperatives serve end-users, such as residences and businesses, which make up their membership. Generation and transmission cooperatives typically sell wholesale power to distribution cooperatives and are cooperative federations owned by their member co-ops.

Examples:

The National Rural Electric Cooperative Association represents electric cooperatives in the changing political climate around climate change.  With NRECA’s help, electric cooperatives are taking the steps needed to reduce their carbon footprint while still providing rural America with affordable electricity.

Touchstone Energy is a cooperative brand shared by more than 700 electric co-ops in 46 states.

Mt. Pleasant Solar Cooperative helps its members learn about and affordably install home solar systems.

Telecommunications

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.

Examples:

The National Rural Telecommunications Association provides up-to-date telecommunication services to rural America.  It is the leading distributor of satellite television service and hardware to rural America, reaching more than 1.7 million rural consumers – including nearly 20 percent of all DIRECTV subscribers.

The National Telecommunications Cooperative Association represents nearly 600 small telecoms, roughly half of which are cooperatives.

Water

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 frequently known as rural water associations, many of these organizations function as cooperatives.

Examples:

The National Rural Water Association has nearly 27,000 members, comprising roughly 94 percent of all water utilities in the U.S.

The Interstate Commission on the Potomac River Basin was formed by water utilities in four states and the District of Columbia to manage water issues that were larger than any one utility’s reach.

Source: National Cooperative Business Association (USA)

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