And how citizens reclaimed at least one Energy co-op in the U.S. See the second article below...
Rural Electric Cooperatives and Renewables: The Future of Distributed Generation?When we think about renewable energy, we often envision futuristic technology and progressive ideas. When we think about rural America, we might picture older traditions rooted in an agricultural lifestyle. And yet, we are increasingly finding some of the most exciting examples of renewable energy development far from busy metropolitan centers.
In particular, rural electric cooperatives, which provide power to sparsely populated areas of the country, are becoming increasingly involved in the politics of renewable energy and distributed generation (DG). Some stand in direct opposition to progressive energy policies or DG. Others, however, have begun to champion change.
What are Rural Electric Cooperatives?Electric cooperatives are non-profit utilities that are established to provide at-cost electric services to their member-customers. Created by an Executive Order in 1935 under FDR’s New Deal, the Rural Electrification Administration (REA) brought electricity and prosperity to rural areas of the country that investor-owned utilities refused to serve because of cost concerns. The REA provided low-interest, long-term loans to entities that would construct electrical infrastructure for rural areas of the country. Farmers and other rural citizens formed cooperatives to take advantage of the loans. Now, electric cooperatives provide electricity to 12% of Americans, owning 42% of the country’s electric distribution line miles to accomplish that task.
There are two types of cooperatives: distribution cooperatives, and generation and transmission (G&T) cooperatives. Distribution cooperatives provide end-users with electricity, usually residences and businesses. Generation and transmission cooperatives are usually owned and managed by several distribution cooperatives to sell wholesale power to distribution cooperatives.
Electric cooperatives are owned by their customers, who each have one vote. A Board of Directors, which is elected from among the membership, governs the cooperative and hires a professional staff. The Board establishes the policies and procedures that are implemented by the cooperative’s management.
It is this one member, one vote democratic structure that engages cooperative membership and sets electric cooperatives apart from their investor-owned utility peers, who are controlled by shareholder interests. The democratic structure of electric cooperatives can enable cooperatives to make progressive changes to their energy policies, but only if their member-customers demand renewable energy.
Unfortunately, the vast majority of rural electric cooperatives are hostile towards renewables. The National Rural Electric Cooperative Association (NRECA), the national trade association that represents over 900 rural electric cooperatives to state and federal legislatures, has published its stance on several key renewable policies, including:
- Opposing feed-in tariffs, net metering, and distributed generation, based on the argument that these policies would result in significant cost increases for customers;
- Opposing mandates on power supply(renewable portfolio standards) on the grounds that they could undermine local board control of power supply decision-making, threaten system reliability, or unduly raise the cost of electricity for members; and
- Opposing using Clean Air Act regulations to regulate greenhouse gas emissions.
Rural electric coops also often view state Renewable Portfolio Standards (RPS) as a threat to the affordability of electricity for their members, as well as an infringement on their independence. Currently 29 states have RPS laws in place, which also apply to cooperative utilities, though usually at lower standards. This fight is occurring in Colorado and other states, where rural electric coops are going head to head with government regulators and environmentalists over RPS deadlines that they feel are too ambitious.
Cooperatives can vary significantly on how they approach renewables, however. There is an emerging movement of cooperatives that see renewables as an opportunity to generate their own electricity, diversify their power supply, protect members from volatile prices, and create jobs in the communities of their members. Here at CPN we are getting an increasing number of requests from members of cooperatives asking: “How can we change our local Coop?”
Specifically, as renewable industries achieve economies of scale and installation prices plummet, rural electric coops are increasingly turning to renewable options for electricity and heat production. Distributed generation is inherently advantageous to rural communities, as it eliminates the excessive costs of connecting long electricity lines from current generation sites to individual rural communities, where the average number of customers per mile of line is less than one fifth that of investor-owned utilities in more densely populated areas. Renewable generation sites can even be located on, or in close proximity to, residential properties because they don’t produce pollution like coal-fired facilities. This also reduces the risk of outages due to severe weather disturbing long transmission lines, increasing rural self-reliance. The inherent advantages distributed generation presents to rural communities, combined with the more cohesive and engaged customer bases of electric cooperatives, could soon make rural electric cooperatives a major force in the demand for distributed renewable electricity generation.
There are several electric cooperatives across the country that have begun adopting renewable energy sources into their fuel mix. For example, Dairyland Power in Wisconsin has sourced 12.5% of its retail energy sales from wind, hydroelectric, landfill gas, animal waste, and solar, exceeding its RPS mandate by over 4%. Southern Maryland Electric Cooperative installed a 5.5 MW, wholly-owned solar farm. And in sunny Hawaii, Kaua’i Island Utility Cooperative has installed over 280 watts of solar per customer.
An Outstanding Example of a Rural Cooperative Embracing RenewablesAmong rural electric cooperatives that are leading the charge for renewables, Farmers Electric Cooperative (FEC) stands out. Located in rural Kalona, Iowa, FEC currently serves 640 subscribers/members. Located in one of the most conservative communities in the nation, it is also quite possibly the most progressive utility in America. The coop offers a number of incentives to encourage customers to develop renewable energy projects or implement energy efficiency measures, including a feed in tariff, energy efficiency incentives, remote real-time metering, and load controls. As of October 2013, FEC had over 20 customer-owned solar electric systems with a combined capacity of 260 kW, ranging in size from 2 kW to 50 kW. FEC also manages a 40 kW solar garden/community solar project that is fully subscribed. With 20% of the coop’s subscribers buying in to solar PV, the FEC has one of the highest participation rates for a green power program of any utility in America. They’ve also started constructing a 500 kW solar farm that, once completed, will place FEC as the national leader in installed solar with 1250 watts per member-customer.
FEC’s policies are decided by a volunteer Board of Directors that is elected each year by the members. The cooperative’s activities are implemented by a general manager and staff. Though Warren Mckenna, the general manager, has driven many of the cooperative’s innovative programs and emphasis on renewable energy, he has declared that, “If it can be done here, it can be done anywhere.”
The following are a number of documents that outline the successes of FEC, details of their programs, and what Warren envisions for the future of coop:
- Maharishi University of Management Report on FEC – A detailed report of the FEC’s history and various programs. An excellent, detailed breakdown of how FEC has supported distributed generation.
- Warren McKenna Blog – A January 2013 25x25 guest blog written by Warren McKenna explaining why the FEC has pursued renewable projects, and relating his experience in Germany for his future plans for the FEC.
- 25x25 Germany Renewable Energy Study Tour – In September 2012, a group of rural and energy leaders ventured to Germany with the 25x25 organization for an educational tour of renewable energy facilities. This report details the tour, and provides information on the group’s findings and its recommendations for future actions by the 25x25 Distributed Energy Work Group.
- Iowa City Press Citizen Article – December 2012 local newspaper article about Warren McKenna and his work with the FEC.
- FEC Work – A brief discussion of the FEC staff and some of the work the cooperative has done in the past.
- NREL Press Release – A May 2011 press release from the National Renewable Energy Laboratory, recognizing the FEC for achieving the third highest customer participation rates in the country in its green power program. Also listed are other top performing utilities.
Community Power Network offers tools and resources to help communities work for change. If you’d like help starting a petition, advocating for better policies for your rural electric cooperative, or help getting progressive members elected to your coop board, contact us!
U.S.: Citizens Reclaim Energy CooperativesATLANTA, Georgia, Apr 30 2012 (IPS) - As the United Nations and countries around the world look at cooperatives as an alternative economic model for the production of energy, rural energy cooperatives have thrived for over eight decades in the U.S., and citizens in some parts of the country are beginning to reclaim them through the democratic process.
Cobb EMC's new board voted to pursue solar energy through a power purchase agreement. Credit: Living Off Grid/CC BY 2.0
Georgia has the largest network of EMCs in the nation in terms of the number of customers served, with 42 customer-owned EMCs providing electricity and related services to four million people, nearly half of Georgia’s population, across 73 percent of the state’s land area.
Originally, the EMCs were part of a New Deal initiative to bring electricity to rural areas because private enterprise was not doing it. The federal government provided seed money credit to get them going, and the programme was run under the Rural Electric Administration.
“When the (energy) co-op movement started, it was very democratic,” Seth Gunning, organising associate of the Sierra Club’s Beyond Coal Campaign, told IPS.
“Very quickly, though, it was sort of taken over by the same social institutions that run local governments and local businesses, and it sort of turned into this social club thing, that still exists all over Georgia. If you have a brother-in-law that sits on board, and there’s a vacancy on the board, you’re likely to get that seat,” Gunning said.
Most citizens and energy consumers in Cobb County, Georgia, did not realise they were members of the Cobb EMC, or what privileges that brought them, until a recent scandal in which it was revealed that the Cobb EMC CEO and Board of Directors were engaged in racketeering.
Cobb EMC, a non-profit, had created a for-profit entity called Cobb Energy. The EMC contracted out all of its work to the entity at a 12 percent premium, while the EMC CEO and Board of Directors also served in the same positions at Cobb Energy, thus profiting from Cobb EMC.
Instead, the profits are supposed to be returned to the members or to community initiatives of members’ choosing, such as donations to nonprofit organisations or investments in community infrastructure.
A number of lawsuits were filed, included a lawsuit seeking that profits dating back to 1939 be returned to EMC members. Additionally, the CEO was indicted.
This debacle – which seemed like a soap opera, or, even more so, a telenovela – led Cobb EMC members to get involved in the democratic process again.
Community organisations such as the Cobb Alliance for Smart Energy (CASE) were formed. They recruited and vetted reform candidates to run for the Board of Directors, after a judge mandated the EMC hold board elections for the first time in over a decade. At one meeting before the election in September 2011, over 3,600 members showed up to vote on whether to accept mail-in ballots at the election. Prior Cobb EMC meetings had only had a few hundred members to show up.
At the end of the day, after elections were held in November 2011 and March 2012, every single member of the Board of Directors was replaced with a reform candidate.
A few days ago, the new directors held their first Town Hall Meeting for EMC members, and are expected to open up their board meetings for members to attend in the near future.
As a result, in January 2012, the new Cobb EMC Board voted to divest from two proposed new coal energy plants in Georgia, Plant Washington and Plant Ben Hill. Prior to that, Cobb EMC had been part of a consortium of several EMCs called Power4Georgians (P4G), that had planned to build the two new plants.
Earlier this month, plans for Plant Ben Hill were cancelled, in part because the Cobb EMC pulled out of the project. Only four Georgia EMCs remain as part of P4G; plans for Plant Washington remain on the table, but Gunning says he believes P4G will be unable to find an investor willing to take on the project.
Also, earlier this month, Cobb EMC’s new board voted to pursue solar energy through a power purchase agreement, marking a complete turnabout from investment in dirty energy towards clean energy sources for the co-op and its members.
According to Gunning, a very similar turnaround happened with an EMC in Pedernales, Texas, near Austin, and citizens in other parts of Georgia are working to reshape their EMCs.
Despite the difficulties and struggles that citizens have had with their local EMCs, Tom Barksdale, chairman of the CASE, said he still thinks EMCs are a good idea, so long as they are done right.
“I do believe that (energy) co-ops could work in less developed countries or developing countries for the same reason they originally worked in the U.S.,” Barksdale told IPS.
“I think co-ops work, but like any democracy, the members have to pay attention to what they’re doing. In that sense, small is better. They should be set up with specific areas, instead of as massive utilities,” he said.
“The co-op was the idea that neighbours, people who knew each other personally, would get together in relatively small areas to bring electricity to the area. The situation changed when what used to be a few thousand members became like Cobb EMC with over 200,000 members. It became unwieldy and got out of control,” he said.
“The good ol’ boys found out they could do whatever they wanted to and they could get away with it,” he said.
Barksdale also said that EMCs should have “institutional safeguards” such as open board meetings, open records, community meetings in addition to board meetings, and perhaps some government oversight.
“They shouldn’t be able to maintain fiction that they are private; they should be seen as quasi-public,” he said.