By DeAnna Greene
Electric cooperatives like Valley Electric (VEA) provide electricity to millions across rural America. They grew out of necessity when investor-owned utilities believed it unprofitable to provide electricity to rural areas. Co-ops have a unique structure that benefits members, not shareholders.
Despite the rich history of cooperatives, common misconceptions are still prevalent. Let’s dispel some of these common myths.
Myth: Electric Cooperatives Are the Same As Traditional Electric Companies
Fact: Electric cooperatives are different from traditional electric companies. While both organizations provide electricity, the ownership and operational structure of co-ops stand apart.
Unlike investor-owned utilities, co-ops are owned by the members. This means the electric consumers are also its owners. Members have a direct say in the co-op’s governance. For Valley Electric, members vote to elect representatives to serve their districts on a board of directors that collaboratively determines what is best for the co-op as a whole.
This democratic control ensures the co-op operates in the best interest of the communities and members it serves.
Myth: Electric Cooperatives are For-Profit Organizations
Fact: Co-ops, like Valley Electric, are not-for-profit organizations. Their main purpose is to provide safe, reliable, and affordable electricity to members, rather than make a profit.
Revenue received above operating costs is reinvested in the cooperative to improve services and is allocated back to the membership in capital credits.
Myth: All Co-ops Pay Out Capital Credits on an Annual Basis
Fact: While some cooperatives follow this practice, it is not universal. Capital credit payouts vary depending on an individual cooperative’s governing documents and the organization’s financial health.
For Valley Electric, the cooperative returns capital credits when the board of directors determines that it is financially able to do so.
Myth: Electric Cooperatives Only Provide Electricity
Fact: While providing electricity is a core function of an electric cooperative, many engage in a variety of other activities that benefit their communities. Many co-ops now offer broadband services, energy-efficiency programs, and other community engagement activities.
For Valley Electric, the need for high-speed communications in its rural communities guided the organization to create Valley Communications, its broadband subsidiary.
Myth: Electric Cooperatives are Government-Owned
Fact: Electric cooperatives are owned by the members they serve. They are independent, private entities controlled by the membership. Co-ops often work closely with government agencies through grants, regulations, and policy influence.
Myth: Electric Cooperatives are Not Regulated by the Government
Fact: Cooperatives must follow all state and federal laws that pertain to electric cooperatives while operating for the good of the membership. A public utility commission governs some electric utilities. Depending on state requirements, cooperatives may not be required to answer to a PUC. A PUC ensures that for-profit utilities operate fairly.
A cooperative’s main goal is to operate in the best interest of its members. The member-driven governance model ensures decisions are made locally, focusing on the needs and interests of the community.
Myth: Electric Cooperative Members Vote on All Business Decisions
Fact: Electric cooperatives are democratically controlled. However, this does not require input and voting on everyday decisions. Cooperatives ensure efficient operations through a democratically elected board of directors and well-written bylaws. Members vote for their district’s board of directors who represent the district and approve bylaws and amendments. This structure helps the cooperative respond quickly to changing circumstances and make well-formed decisions.
Myth: Electric Cooperative Members Who Do Not Pay Their Bills Have No Impact on the Cooperative
Fact: Members who do not pay their bills can put a financial strain on the cooperative. This can make it difficult to cover expenses and maintain essential services. These unpaid bills can also put unnecessary strain on other members if costs need to rise as a result of unpaid service.
Myth: Electric Cooperatives Are Not as Reliable as Larger Electric Utilities
Fact: Despite the geographically spread out areas, many electric cooperatives have excellent reliability and response times. Cooperatives are concerned for their communities and work hard to ensure excellent customer service. They invest heavily in improving their systems and technology to ensure power stays on. Valley Electric continually looks at new technologies and strategies to improve reliability at the cooperative.
Myth: Electric Cooperatives Are Not Financially Stable
Fact: Electric cooperatives have proven to be financially stable. Although some cooperatives have faced financial difficulties, their primary focus is the financial health of the organization. Cooperatives are owned by their members. Therefore, there is greater accountability and a focus on long-term financial strategies.
At Valley Electric, there have been times when financial stability was a struggle. However, with the help of good leadership and an effective board, the organization currently has financial strength.
Myth: Cooperatives Are Slow to Adopt New Services & Technologies
Fact: Electric cooperatives often pioneer new technologies that can improve operations and the lives of their members. By adopting new technologies, cooperatives can improve operations, potentially lower costs or bring needed services to their rural communities. Valley Electric continually looks for technology and services that can benefit the membership.
By understanding the true nature of electric cooperatives, members can appreciate their valuable contributions in providing electricity to rural communities across the United States. Despite common misconceptions, electric cooperatives are committed to their mission.
Valley Electric’s mission is to improve the lives of the people and community it serves. It is dedicated to providing safe, reliable and affordable services.