Yesterday’s post was on Municipal utilities, today we will deal with Cooperatives (Coop). First there are two types of Cooperatives, Distribution and G&T.
The focus today is Distribution Cooperatives. First Distribution Cooperatives were formed by The Electric Cooperative Corporation Act in 1937. The goal was to bring electricity to rural areas of the US. The Rural Electrification Administration (REA) was created to administer the creation and operation of both types of cooperatives. Cooperatives have members, not customers. The board that administers a specific distribution cooperative is made up of members and is typically selected by a vote of the members.
Coops typically operate on a cash accounting basis and work hard as a non-profit to keep their costs down. When moving the difference between settling in a coop’s territory or not can mean as much as a 50% difference in electricity cost.
Coops have 56% of the land area and 30 million customers. Pedernales Electric Cooperative is the largest with 300,00 members, and The Isle au Haut Electric Power Co in Maine is the smallest with 121 customers.
To keep costs down, many outsource IT and cyber security to cooperatives like National Information Solutions Cooperative; construction; generation and the transmission to G&T coops; and R&D to NRECA. Almost all the Coops belong to Touchstone, the national brand for Coops and so much more.
Reporting and many of the regulations that Coops operate under come from the Rural Utility Service (RUS) which is part of not the Department of Energy, but the US Department of Agriculture. RUS can act as a bank for the Coops, offering loans (sometimes at very favorable rates). Coops are typically not regulated by the state, and distribution Coops are not subject to most FERC regulations. The annual reports can be found on the RUS website. While friendly rivalry exists between Coops (including baseball games), Coops talk to each other and help each other more than any other class of Utilities.
RUS also works with the Coops to develop construction standards and other intellectual property to support the Coops, much of this work is lead or supported by NRECA. When one Coop does a pilot (e.g., a new type of storage system or a recloser), if NRECA is involved, all Coops have access to the results and lessons learned. Municipal and other utilities have access to much of this material, providing national benefits to everyone.
Because of little state regulation, many Cooperative also provide broadband to their members.
Part #1 - Municipal Utilities
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