A few days ago, my husband and I were talking with a man about how inexpensive electricity is where we live. I asked him if he knew why our electricity was so inexpensive and he said he did not so I told him that it was because we had an electric cooperative rather than being run by a for-profit corporation. I knew it was true, but I didn’t know the story behind it until I looked it up.
The Birth of the Electric Cooperative
In 1935, Franklin Delano Roosevelt signed an executive order creating the Rural Electrification Administration. A year later Congress gave the agency the money and power needed to promote rural electrification by providing low-cost loans to build transmission and generation facilities.
Boone Electric Cooperative was incorporated on June 11, 1936 – the first rural electric cooperative to form in the state of Missouri. By the end of 1937, Boone Electric served just more than 140 members in rural Boone County.
Rural cooperatives formed rapidly to take advantage of the favorable financing. Farm by farm, village by village, the lights went on across rural Missouri and rural America. And as electrical needs grew, the REA continued to provide low-cost financing. Eventually, major generation facilities, built primarily during the 1960s and 1970s, were financed with help from the REA.
The Advantages Continue
Today, numerous advantages exist for homes that utilize electricity from a cooperative over for-profit utility companies.
- Upon joining an electrical cooperative, I was considered a member and owner rather than a customer.
- Electric cooperatives are service focused. My coop provides electricity to rural areas while commercial utility companies are looking at their bottom line for their stockholders.
- My cooperative follows democratic processes, allowing each member to vote in board member elections, participate in policy making, and influence the company in sharing their ideas and concerns.
- My cooperative is community focused and work to improve the sustainability and well-being of their local and surrounding communities.
- My electric cooperatives returns its revenues or margins to cooperative members in the form of capital credits.
- One of the biggest advantages of being a member of an electric cooperative is that my service is constantly getting better at a lower cost per kilowatt hour than it would cost me for if I were with a for profit company.
Could Cooperatives Be the Answer in Other Areas?
Other areas could benefit from utilizing cooperative power over the for-profit interests of a few people. California electric companies have already been thinking of creating electric cooperatives and in order to lower prices, other areas could do the same.
However, what if the idea of community cooperatives didn’t end with providing inexpensive renewable energy? What if cooperatives were used in other forms of utilities? What if cooperatives were created to deal with waste management? What if the waste management cooperative was also involved in recycling? What if they worked toward reselling recycled materials to other companies or even managed to create recycled products from those items. What if the members voted to have more of it done at a community level as part of the cooperative and those items could be sold or even used within the community? Imagine how everyone could benefit because they all own the company that recycles garbage into usable items.
Imagine a Different Type of Insurance Program
Imagine that same cooperative spirit being extended toward insurance where instead of stockholders benefiting from your insurance premiums, the benefits of the premiums go to the cooperative. Imagine fire insurance paying for all the damages instead of there being a deductible and at a lower cost than what you’re paying now.
When I was a kid in the 1970s there were companies that had this type of insurance that offered fire and wind insurance. This insurance was called Patrons Mutual where you paid a small membership fee and then a small insurance premium. Even with the membership fee, the cost was lower than other insurance companies were charging. However, the other insurance companies lobbied the government and demanded that these companies that demanded membership could not sell insurance and that insurance had to be a for-profit business.
Imagine, however, if we could lobby the government to change these laws and allow cooperatives to exist in insurance and not just fire insurance, but in all types of insurance. Imagine health insurance at reasonable costs to everyone. Imagine insurance companies where the recipients could decide if they wanted their insurance to include preventative measures, to include the ability to pay for experimental procedures so that others could live. They could more likely have all these things because they didn’t have to pay for dividends to stockholders and all of the money is being spent by the contributors who are also the recipients of the healthcare insurance who voted for how their insurance money would be spent through a democratic process.
So, what do you think? Do you think that cooperatives might be the answer to many financial problems we currently face? If not, what problems do you see with this idea? If yes, what do you think is our next move to make cooperatives more of a reality in our communities? Also, what other possible ways do you think that we could develop cooperatives in our communities?
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