Today, as President Joe Biden’s $2 trillion infrastructure bill is debated in Congress, it’s worth recalling that this isn’t the first time the US has faced an infrastructure deficit. “By the 1930s nearly 90 percent of US urban dwellers had electricity, but 90 percent of rural homes were without power. Investor-owned utilities often denied service to rural areas, citing high development costs and low profit margins,” recalls one account.
The policy response: rural electric cooperatives (RECs). In 1935, President Franklin Delano Roosevelt signed Executive Order No. 7037, establishing the Rural Electrification Administration—today’s Rural Utility Service (RUS)—which provided low-cost loans to co-ops to wire rural America; by 1953, 90 percent of rural Americans had power.
There is a lesson in this—and it is not just the power of the cooperative business model to solve problems, although that is important. Indeed, as NPQ has covered, RECs can play a key role today to close the rural-urban broadband gap. But there is a lesson about politics, too, because it is worth asking how RECs became the dominant form of electric provision in rural America. Turns out there is a century-and-a-half-old tradition of progressive organizing in rural America.
Some readers may recall that today’s public bank movement, which aims to create city- and state-owned entities that can hold and invest public funds and remove them from Wall Street banks, is seeking to follow a playbook the Bank of North Dakota has used since 1919. And that entity wouldn’t exist but for a quasi-socialist political party known as the Nonpartisan League that won power in the state in the late 1910s. Co-op organizing, too, is part of this rural radical tradition, and co-ops even today retain a central organizing role in much of rural America, including in agriculture.
It was because of this tradition that when the opportunity to get loans from the federal government to create electric co-ops arrived in the 1930s, the co-op form resonated. Farmers, ranchers, and other community members readily took advantage to wire isolated rural areas. Henry Wallace, an Iowan who served as the Agriculture secretary and would become a kind of Bernie Sanders-type figure and later run for president on a third-party ticket in 1948 and garner over a million votes, oversaw the startup of the loan and technical assistance support programs in Washington. But REC-led electrification in rural America wouldn’t have happened without the commitment and vision from the residents who organized themselves into cooperatives, applied for the loans, and literally put up the poles and lines in their communities. These bold actions brought light, energy, and endless opportunities to their communities by creating electric co-ops that were owned by the residents they served.
Today, there are about 900 RECs located in 47 states that provide electric power (and sometimes broadband and other services) to 42 million people. And yet, what started as community members working together and seizing opportunities to make life better for their families has largely calcified into a system of aging governing boards protected by practices that disenfranchise voters.
To build a basis for green power generation in rural America is an organizing challenge, just as much as it is a technical challenge of closing polluting facilities and replacing them with new facilities that generate renewable-sourced power.
The Slow Demise of the Spirit of Cooperation in RECs
Cooperatives throughout the world operate according to seven basic principles: (1) voluntary and open membership, (2) democratic member control, (3) member economic participation, (4) autonomy and independence, (5) education, training and information (6) cooperation among cooperatives, and (7) concern for community.
Adherence to the spirit of these principles allowed RECs to boom for decades and improved the quality of life for the people they served—not just by providing electricity, but also by being investors in local community economic development.
Yet today we find in RECs high consumer bills, a lack of racial diversity in board positions, a lack of access to simple technologies such as broadband internet, and dirty energy production that has negative health and climate implications. For example, 60 percent of co-op power comes from coal, compared to 30 percent for all other electric utilities. To make matters worse, these plants are underperforming and are more costly to member-owners, as opposed to a more diversified generation portfolio that non-cooperative utilities are actively pursuing across the country. Far from leading the green power revolution, RECs are green power laggards.
And while there are many positive exceptions, RECs have often fallen short in investing in the local economy. From the bluegrass of Kentucky to the plains of Texas and beyond, rural residents suffer due to structural racism and systems that value profit over low-income households. More than 90 percent of the “persistent poverty” counties in the US are served by RECs. Around 250 RECs serve Native American nations. Most rural Black communities are served by electric cooperatives as well.
RECs are by statute democratic organizations, but in many RECs, internal democracy has atrophied. Too often, co-op member-owners find themselves unable to attend board meetings, review financials, participate in board elections, or even influence energy policy within their co-ops. As result, an insular “good ol’ boys” network often emerges to fill the power vacuum.
This lack of member participation has real-world effects. The further co-op leaders stray from centering the voices of member-owners, the greater the challenges co-op members face. These include high energy cost burdens,