What is a Cooperative?

How Your Electric Cooperative Works

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Electric cooperatives are:

  • private independent electric utility businesses
  • owned by the consumers they serve
  • incorporated under the laws of the states in which they operate
  • established to provide at-cost electric service
  • governed by a board of directors elected from the membership, which sets policies and procedures that are implemented by the cooperatives’ professional staff.

Most electric co-ops are distribution cooperatives that deliver electricity to the consumer. Some are generation and transmission cooperatives that both generate and transmit electricity to meet the power needs of distribution co-ops.

In addition to electric service, many electric co-ops are involved in community development and revitalization projects, such as small business development and jobs creation, improving water and sewer systems and assistance in delivering health care and educational services.

What Makes A Cooperative Different?

Rural electric cooperatives are operated to provide at-cost electric service to the consumer-owners. By comparison, investor-owned utilities are operated to maximize profit for the shareholders. A co-op’s net margin above expenses and reserves does not belong to the utility; it belongs to the individual consumer-owners of the co-op. The margins must either be used to improve or maintain operations or be distributed to those who use the co-op’s products or services.

Read More
7 Guiding Principles of a Co-op