What is an Electric Cooperative?

Electric cooperatives are nonprofit, member-owned utilities providing electric service to predominantly rural areas. Electric Cooperatives were initiated during the 1930's by farmers and their rural neighbors after private power companies refused to provide them with electric service at reasonable rates.

A private power company, like many other corporations, is controlled by stockholders who may or may not be served by the utility. Electric cooperatives are owned and controlled by the people they serve. Electric cooperatives exist for the sole purpose of providing electricity to members at cost, and they subscribe to a set of cooperative principles that set them apart from other utilities.

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Cooperatives are unique

Cooperatives are owned by the consumers they serve and guided by a set of seven principles that reflect the best interests of those consumers. More than 100 million people are members of 47,000 U.S. cooperatives, offering a wide array of goods and services such as health care, insurance, housing, food, heating fuel, hardware, credit unions, child care and utility service.

Seven guiding Cooperative Principles

Voluntary and Open Membership
Cooperatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political, or religious discrimination.

Democratic Member Control
Cooperatives are democratic organizations controlled by their members, who actively participate in setting policies and making decisions. The elected representatives are accountable to the membership. In primary cooperatives, members have equal voting rights (one member, one vote) and cooperatives at other levels are organized in a democratic manner.

Members Economic Participation
Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership.

Members allocate surpluses for any or all of the following purposes: developing the cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership.

Autonomy and Independence
Cooperatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy.

Education, Training and Information
Cooperatives provide education and training for their members, elected representatives, managers and employees so they can contribute effectively to the development of their cooperatives. They inform the general public, particularly young people and opinion leaders, about the nature and benefits of cooperation.

Cooperation Among Cooperatives
Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.

Concern for Community
While focusing on member needs, cooperatives work for the sustainable development of their communities through policies accepted by their members.