Rural electric cooperatives are private, non-profit electric utilities owned by the people they serve. Each of those member-owners has a right to vote on who represents their interests on the governing Board. Ideally, the Board policies and procedures encourage healthy democratic participation, resulting in a Board that is responsive to the interests of member-owners. Rural Electric Cooperatives (RECs) are sometimes called Electric Membership Corporations (EMCs).

Understanding the Seven Cooperative Principles:

-Open and Voluntary Membership

-Democratic Member Control

-Members’ Economic Participation

-Autonomy and Independence

-Education, Training, and Information

-Cooperation Among Cooperatives

-Concern for Community

In the early 1930’s, only 10% of rural homes had electricity, which was an equity issue of national interest. President F.D. Roosevelt established the Rural Electrification Administration (REA) in May of 1935, and a year later, the Rural Electrification Act was enacted to offer low cost federal financing to co-ops. https://www.electric.coop/our-organization/history

-42 million people

-56% of US land mass

-92% of persistent poverty counties

-21 million homes, farms, schools, businesses

-$40 billion in annual revenue

https://www.electric.coop/wp-content/uploads/2021/10/2022_NCS4918_Coop_FactsAndFigures_6.03.22a.pdf

If you have an account with a Rural Electric Cooperative, you are a member-owner and you have a right to vote in the democratic governance of the utility, including voting in board elections and even running for the board. Because very few owner-members actually participate, it doesn't take many folks to initiate change.

If your energy company’s name has the word cooperative in it, you’re a member-owner. If not, you could look at the NRECA’s membership list to find out if your utility is listed, but not all cooperatives are NRECA members. If they’re not listed, you may have to check out their website for some clues. Some REC’s don’t make it easy to see that you own the place!

Large, rural, overlapping, and confusing service territories

REC’s meters are spread out over large service territories, making infrastructure and transmission costs higher per-meter than other utility types. REC’s also have higher costs for maintenance and weather-related repairs on a per-meter basis.

Outdated, expensive infrastructure

Legacy debt for outdated infrastructure is stranding electric cooperatives and rural communities with stranded assets.

High debt levels

Unfortunately, the REC industry in the power sector holds roughly $100 billion in debt, nearly half of which is owed directly to the federal government.:

Local example: East Kentucky Power Cooperative owes $1.9 Billion to the Rural Utility Service, and members pay about $180/year per meter to pay the interest on the utility’s debt.

The Case for Investing $100 billion in Rural Electric Cooperatives

Need for federal investment in clean energy without increasing debt.

RECs have no revenue stream to pay for debt service, electricity, and transmission costs outside of the electricity bills paid by their member-owners. Stuck between high debt loads, high transmission costs, and expensive coal-fired power generation, rural electric cooperatives are charging some of the most distressed communities some of the highest prices for electricity. RPC is proud that the federal government has recognized that a lower carbon future requires accounting for the higher cost of serving rural communities and has made a down payment on the needed investments through the NewERA and PACE programs. Now we need another $90 Billion in federal investments through grants and loan forgiveness to bring rural communities into the ongoing clean energy transition. These conditions would facilitate the retirement of all coal plants currently in operation and potentially all outstanding electric cooperative debt in exchange for new investment in clean energy, distributed energy resources, energy efficiency, high-speed broadband, storage, and electric transportation with new loans at U.S. Treasury rates.

Lack of incentives for clean energy

Historically, RECs have not been able to access many federal incentives for clean energy. Investor owned utilities have been tapping these incentives for more than a decade and have a healthy head start on their energy transitions. Thanks to the Inflation Reduction Act, RECs —and all non-profit organizations — are now eligible for the clean energy tax credits in the form of direct payments from the U.S.Treasury.

Lack of diverse and representative leadership

A 2022 report shows that while rural America is becoming more diverse, rural electricity cooperative leadership is not. The Rural Power Project surveyed the elected leadership of 888 rural electricity cooperatives (RECs) nationwide and found them to be nearly all white and all male. As a whole, women made up just 12.6% of REC board members. Meanwhile, people of color make up 24% of America’s rural population, but the new report found that 96% of REC board seats are held by white people.

Lack of transparency and member-owner engagement

Rural Electric Cooperatives (RECs) have transformed the lives of millions of rural Americans since their creation in the New Deal of the 1930s. However, much of that promise has been lost, and rural democratic movements must reclaim their cooperatives in order to spread democracy, improve people’s lives, and act on the climate crisis. The needs of the people come first, and REC’s must make their annual member meetings and election practices as democratic, transparent, equitable, and accessible as possible for all member-owners.

Many RECs are not regulated by public service commissions and are governed solely by their elected boards. As such, board meetings, annual meetings, board elections, and decision-making processes must be as accessible, equitable, transparent, and democratic as possible.

How Can You Participate in Energy Democracy at Your Co-op?

Example Member Bills of Rights:

-Cobb EMC Members’ Bill of Rights at beginning of Bylaws

-Pedernales Member Bill of Rights in their Articles of Incorporation

-Beartooth Rights & Liabilities of Members in Bylaws

The Inflation Reduction Act (IRA) contains historic investments in rural electrification that will help secure the energy transition, save rural families money, and create 90,000 rural jobs over the next ten years.The program will allow for coal power plants owned and operated rural electric cooperatives to be replaced through investments in renewable energy, battery storage, and improvements to generation and transmission efficiency.

Here’s a fraction of what’s in the IRA for Rural Electric Cooperatives:

New ERA Program: $9.7 billion for rural electric cooperatives to make new investments that will reduce energy costs for member-owners while cutting greenhouse gas emissions. Awards can cover as much as 25% of the projects' costs and a single cooperative can receive a grant as large as $970 million. Proposals that reduce greenhouse gas emissions the most will be prioritized.

RPC IRA Fact Sheet (Final).pdf

PACE Program: $1 billion for rural electric cooperatives and other entities to make renewable energy investments. Up to 50% of the loan is forgivable based on the recipient meeting certain criteria.

RPC IRA Fact Sheet (Final).pdf

REAP Program: The U.S. Department of Agriculture’s Renewable Energy for America Program has enabled thousands of farms and rural businesses to reduce energy costs by providing grants and loans to buy more energy-efficient equipment, insulate buildings, and generate electricity with solar power and other renewable technologies. The REAP program was expanded, and it now provides grants for 50% of the cost of these investments and loans up to 75% of eligible project costs, including backup battery systems that can keep the power on even when the grid goes down.

REAP.pdf

Examples of local co-op projects, link to state fact sheet about applications

IRA Climate and Clean Energy Solutions State Fact Sheets

RECs have the power to help their members go solar through one-to-one net metering or by offering incentives for distributed solar. Each program allows member-owners to voluntarily invest in solar and lower the amount of energy a co-op needs to supply on its own. Kit Carson Electric Cooperative is a good example of an REC leading the way!

RECs can also offer free energy audits and solar evaluations, help analyze potential energy retrofits, evaluate contractor bids, and make sure folks understand how to avoid being scammed by fly-by-night companies.

RECs can help member-owners access existing federal tax credits and direct payments for clean energy, alongside rebates and other incentives that will soon be rolled out by state governments. See the Residential Clean Energy Credit, the Clean Energy Tax Incentives for Businesses, or the Direct Pay option through the Inflation Reduction Act for example programs.

RECs are facing growing electric demand as member-owners electrify. Even as RECs seek a record-breaking number of clean energy investments, many will still face tremendous needs for new capacity to meet projected load growth. Rural Americans also face a sharp increase in extreme weather events and need their RECs to make investments that bolster local resiliency. Many cooperatives are helping their member-owners access battery storage in their homes and businesses, and new pilot programs are benefitting the entire membership. Learn more about what Bandera Electric Cooperative in Texas is doing to help their member-owners access battery storage!

Rural Americans spend up to 40% more on energy than their urban counterparts, a disparity that is even more glaring when you consider income. Most families can’t pay up-front for energy upgrades, and are unwilling or unable to finance improvements without a clear understanding of the financial benefits. Inclusive utility investments based on the Pay As You Save® (PAYS®) system can overcome these barriers. In an inclusive utility investment program, a utility provides capital to pay for energy upgrades at a member-owner’s home, farm, or business and recovers its costs through a charge on the customer’s utility bill. With inclusive utility investment, utilities can treat cost-effective building energy upgrades as part of the essential services they deliver, and bring the benefits of lower energy costs and good local jobs home to the entire membership.

RPC Inclusive Utility Investments.pdf

Virtual Power Plants are a climate-friendly alternative to new natural gas generators. Virtual Power Plants (VPPs) are composed of a diverse portfolio of member-owned “distributed energy resources” (like rooftop solar, smart household appliances, and electric vehicles) that are directly managed by a cooperative to reduce demand during peak hours, which helps lower customer and utility energy costs, too. VPPs reduce the need for conventional fossil generators and benefit the entire grid.

RPC Virtual Power Plants Fact Sheet.pdf

Agriculture and solar energy production are increasingly compatible. Nearly 500 co-located solar and agricultural sites are in operation in the United States, and incorporate crops, livestock grazing, and pollinator habitat alongside solar arrays. These integrated systems are known as “agrivoltaics” and provide another opportunity for farmers and rural landowners to earn revenue by placing land into production.

RPC Factsheet: Agrivoltaics.pdf

Democratically engaging with your REC is similar to democratically engaging in your community as a citizen, in that you can vote in elections for your REC’s board of directors or run for a board position yourself. You can also get to know your REC’s board and staff and engage with them on energy and affordability issues that matter to you. Visit your REC’s website for information about the board of directors, board elections, member meetings, and other ways to be in touch with the leadership and staff. If your REC doesn’t provide this information, ask for it! As a member-owner, you have the right to democratically elected representation.