A New Deal for Electric Co-ops: How Members Can Exercise Ownership to Strengthen Democracy — Episode 89 of Local Energy Rules Podcast

Liz Veazey

So some of the co-ops are actively working against member engagement and participation.

Chris Woolery

Hopefully the rural electric co-op organizing toolkit can come into play and get folks who just don’t have a lot of time access to good information, inspirational success stories, down and dirty details about how do I access the finances and the processes that their particular co-ops have.

John Farrell

42 million Americans received their electricity from rural electric cooperatives. Very few realize that they aren’t just customers but owners of their electric company. How can they have a say in what their electric cooperative does? I’m joined by Chris Woolery from the Mountain Association for Community Economic Development in Kentucky and Liz Veazey from the co-op member organizing hub. We Own It to discuss their recently released rural electric cooperative toolkit and online resource to help cooperative members engage with their utility to make it stronger. I’m John Farrell, director of the energy democracy initiative at the Institute for Local Self-Reliance and this is Local Energy Rules, a podcast sharing powerful stories about local renewable energy. Chris Woolery, residential energy coordinator with MACED. Chris, welcome to the program.

Chris Woolery

Hey John. Thanks for having me.

John Farrell

And we have Liz Veazey, network director from We Own It.

Liz Veazey

Yeah. Thanks John. Good to be here.

John Farrell

So you’ve both been deeply involved in creating this rural electric cooperative toolkit. And I could ask you what it’s for, but the website that is really well designed and lays it out really clearly, describes it really powerfully. So I’m just going to read the quote from the website, which is “you have a voice in your electric cooperative. Here’s how to use it.” So I think really gets to that point that these are democratic institutions and that members of co-ops have the opportunity to influence how their electric cooperative does business. So I’d like to start with a slightly different question, which is why should we care about rural electric cooperatives? Why is it important to build this toolkit and why in this moment in time? And Liz was hoping maybe you would take a stab at this.

Liz Veazey

Sure. Yeah. And I’ll start with a little more context on what rural electric co-op are since I think many people may not know. So there monopoly electric utilities that were formed, as John mentioned, around a hundred years ago, after the New Deal legislation created the rural electrification administration or REA 1935. So in the 1920s about 90% of rural areas were not electrified. The investor owned utilities that were bringing electricity to many more urban Americans did not think they would make any money in the more rural spread out areas taking electricity there. So they said, we’re not gonna do that. And then through the support of the REA, the federal government was able to provide access to capital and technical to help rural folks start electric coops. And then a few decades later we went from 90% of the areas not being electrified to almost 90% being electrified. So it was a very successful program in that sense. But I think it’s important to note, you know, who those people were. I mean, I think mostly white land owning men were the ones who had the resources and more working together to form the co-op. You know, and in some places I think descendants of those people may still be in charge of that co-op. So that’s, you know, an important part of the history. Electric co-ops serve around 42 million Americans in 47 States. There’s around 800 electric distribution co-ops and then around 60 larger generation and transmission co-ops that are made up of the distribution co-ops, they cover about 56% of the U.S. land area and have around 45 billion annually in revenue. So I think there’s huge potential for these electric co-ops to be drivers of a new economy, including increasing access in their communities to energy efficiency, to local renewable energy, broadband, and more – though most of the 42 million Americans don’t know that they’re electric co-op member owners and that they should have a say in what their co-op is doing and where their money is going and where their electricity is coming from. But there are some electric co-ops that are really leading and bringing renewable energy efficiency, broadband, electric vehicles and all kinds of things to their communities. But I think we’ll talk a little more about that later. Chris, do you want to add on?

Chris Woolery

Sure. Yeah. Thanks for that great background, Liz. I’ll speak to the co-ops from a more personal frame of reference. You know, if this hadn’t been for rural electric co-ops, I probably wouldn’t be sitting here talking to you about this right now. I used to be a home builder that built energy star homes in central Kentucky and uh, I didn’t even know really how to do it. I wanted to do it and build a, a great energy efficient home. But it was my rural electric co-ops who really taught me, who engaged with me from an economic development standpoint and taught me how to do that and do it well. The first time I ever got a blower door on a house, I build energy star homes for two years before I could get one certified. And it was the rural electric co-ops that did that for me and certified that for me. And so, you know, as a former real electric co-op owner member, I didn’t appreciate the fact that I did have a big say in that cooperative and how it ran. And now as a customer of an investor owned utility, I really wish I did have a say. In Kentucky, we’re fighting for access to net metered solar and in the rural electric co-op, listen to their members on issues like this and the investor owned utilities don’t seem to care what I have to say about it. So those are just some anecdotal examples of the potential for a rural electric co-op to have an impact on an individual, a member-owner, a contractor in their area. And then for economic development.

Liz Veazey

I forgot to mention that all co-ops I think around the world strive to meet the seven cooperative principles and the electric co-ops state that they are their principles as well. And so I just wanted to highlight a few of those that I think can help people who are interested in getting involved in sort of help. I think there’s opportunities to help co-ops better live up to some of these principles. So democratic member control, we can talk more about that, but there’s a lot of opportunities to have that to increase democratic member control and education and training and information. I think there’s a huge opportunity for co-cops to really work to engage their members and educate them and get them more involved and to better understand where their electricity is coming from and what the opportunities are and what the co-op could be doing. Another one is concerned for community in cooperation among cooperatives. So we just wanted to highlight a few of those.

John Farrell

Great. Thank you for sharing those. We’ll definitely have a link to the full list of the seven cooperative principles on the show page for folks who want to see all seven and some context for that. So I think one of the interesting things to talk about is to hook right into that first principle around democratic ownership. So you have this paragraph in the introduction to the toolkit, and I’m just going to read it out loud here, quote, “over the last several decades, most of our rural electric cooperatives have become less innovative and less open to member owner participation. The result is that many member owners have little say over the energy decisions that directly impact their lives.” end quote, and I think Chris, you mentioned this, or maybe it was Liz, that many, many members don’t even know that they are a member owner. They think they’re just a customer. And what I really like too about the home page of the toolkit is not only have that context setting, but there’s this video running in the background that you can click through that is this kind of inspirational history of how rural electric cooperatives electrified much of America. As you talked about Liz, that remarkable decade in which they shifted from almost no access to electricity to almost universal access. And so I guess I’m curious, how did co-ops shift from being almost emblematic of self-reliance, Certainly with some help from the federal government, to institutions that are not doing as good of a job incorporating their members’ voices?

Liz Veazey

Yeah, that’s a good question. I think I should maybe start by saying that each co-op is different and I think some co-ops are a lot better at democratic member engagement and education than others. But you all did that report Re-membering the Electric Co-op, which I think is a great resource and sort of mentioned the research you all did and has a graph about the participation in election and what is the more than 70% of the electric co-ops you all found had less than 10% of the member owners voting and their annual election. Right. And we’ve heard of other co-ops where they’re like, Oh, we don’t have a quorum. We had our meeting at 8:00 AM on a Tuesday and no one came. So we don’t have enough people to meet the quorum. So we just have to reappoint ourselves. But you know, clearly they weren’t trying very hard to get people there. I think, you know, we see the average age of people on these boards is over 70 with very little diversity. No or few women, no or a few people of color. Even in places where, I mean we know women are around 50% of the population in most places, right. And African Americans make up 50% of the population in some of these places, that there may be none on the board. So I think they’ve sort of gotten entrenched. A lot of them seem to be connected to sort of like local good old boys clubs and connected to local media and power structures that can make it really difficult to challenge them. I think they’re making maybe $20,000 or more a year working a few hours, maybe five hours a week, which is a pretty nice deal. And you know, I think in a lot of places they’re then able to help get contracts for their family or their friends to provide services for the co-op. So you know, it’s a pretty sweet gig that they don’t want to give up.

In some places we’ve seen it passed down through families. Your dad was on the board or your uncle was on the board. So it’s become this sort of entrenched thing. So it’s in their interest not to have an engaged membership, not to allow members to attend board meetings and make it really difficult to get on the ballot. And we’ve seen a lot of those things across the country. At some co-ops, some campaigns have had trouble getting local papers to cover their efforts. The paper is struggling, the co-op buys ads, they don’t want to upset them or maybe the owner is friends with the people on the board. So sometimes I think we’ve seen that it requires a journalist from like a larger statewide paper to produce a story. Um, and we’ve seen that in South Carolina with Avery Wilkes reporter at the state dug into high board compensation at a co-op in South Carolina, Tri County. And then the CEO and the lawyer for the co-op ended up siding with members and threw out the board. And then that led to new legislation in South requiring transparency. So, you know, in some places it can move in the right direction. But we’ve seen proxy voting to be a major problem at Rappahannock electric in Virginia, the board seems to end up controlling around 2000 proxy votes or more, maybe almost 3000 so they like encourage people to send back the ballot and they make like the big box that stands out that looks like you’re supposed to like check that to send your proxy to the board and encourage you to send it back to get a prize. So,

John Farrell

And just to clarify too, the proxy vote is essentially saying, I give my vote in this election back to one of the incumbent board members to cast for me.

Liz Veazey

Yes. Yeah. So that has been a problem in a lot of places. And then some folks, you know in the deep South in particular, including folks with the Southern regional councils, co-op democracy projects in the 1980s and one voice Mississippi’s work more recently have found the co-ops changed the rules when they think an African-American might be elected. They’ve thrown out votes, they canceled the meeting. So some of the co-ops are actively working against member engagement in participation, but I think some of the folks we’re working with across the country are interested in looking at more state legislation that maybe prohibits proxy voting like the South Carolina legislation and requires a certain degree of transparency and Colorado has similar legislation that they passed in 2010 so that’s something that people are looking at.

John Farrell

We’re going to take a short break. When we come back, we’ll talk about how the toolkit equips cooperative members to exercise their rights, hear some stories of successful cooperative revitalization, and hear what Chris and Liz suggest co-op members do first.Hey, thanks for listening to Local Energy Rules. If you’ve made it this far, you’re obviously a fan and we could use your help for just two minutes. As you’ve probably noticed, we don’t have any corporate sponsors or ads for any of our podcasts. The reason is that our mission at ILSR is to reinvigorate democracy by decentralizing economic power. Instead, we rely on you, our listeners. Your donations not only underwrite this podcast, but also help us produce all of the research and resources that we make available on our website and all of the technical assistance we provide to grassroots organizations every year. Each year, our small staff helps hundreds of communities challenge monopoly power directly and rebuild their local economies. So please take a minute and go to Ilsr.org and click on the donate button. And if making a donation isn’t something you can do, please consider helping us in other ways. You can help other folks find this podcast by telling them about it or by giving it a review on iTunes, stitcher, or wherever you get your podcasts. The more ratings from listeners like you, the more folks can find this podcast and ILSR’s other podcasts: Community Broadband Bits and Building Local Power. Thanks again for listening. Now, back to the program.

John Farrell

Chris, I want to give you a chance to jump in. I would like to talk a little bit about how the toolkit then empowers members to address this, but it was wondering if you had anything else to add as well on kind of how we’ve gotten to this situation, but then if you want to jump into and talk about how the toolkit equips member owners to exercise their rights, I’d be really interested in jumping into that conversation.

Chris Woolery

Yeah, I think that’s a great connection and I’ll try to make a segue like you suggested. You know, Liz gave you all that you needed to know about the history of co-ops and the fact that if you know one co-op, you know one co op. They’re really reflections of their community and their history and every one of them are so different. We worked with co-ops in our energy programs here in rural Appalachian Kentucky, so I just want to put the history of that, that Liz went over into some bigger context, right? What’s happening in rural America where these co-ops are, they’re covering over 90% of the persistent poverty counties in the United States. They’re losing membership and citizenship, right? Demographics are declining. Economic opportunities are rare and limited to institutional types of employers in many cases. And so board membership on a real co-op is, it is a big deal in a community like this and um, folks in the communities that are struggling, especially in Appalachian Kentucky, but the decline in the coal industry and the ancillary businesses that support that, they just don’t have time to engage with their co-ops in the ways that it takes to keep that democracy fresh, to keep those conversations going. In many cases, you know, I’m not speaking for every community member, but many are still working two and three jobs and, and have they had time to engage with our PTAs, in their municipalities, and their real electric co-ops on top of that, it’s a pretty tough thing to do. And so that’s where we’re, hopefully the rural electric co-op organizing tool kit can come into play and get folks who just don’t have a lot of time access to good information, inspirational success stories down, and dirty details about how do I access the finances and the processes that their particular co-ops have. So like how do you look at their finances? How can you see if they’re transparent in their board meetings? That information’s right there in the tool kit. Some folks that do want to get involved, they don’t have a lot of time on their hands, can maximize the potential for their investment of their time and then they can make those relationships in their communities and build something together if they searched and that’s what the co-op organizing tool caters for.

John Farrell

You’ve mentioned before, you know, you know one co-op, you know one co-op and yet I think one of the things that is really helpful that this tool kit is the way that it shares stories of good things that have happened to give people a sense of if my co-op is unique, but also struggling in one way or another or if it could be better, I have something that I can look up to. And I was hoping that either one of you could share a little bit about the cooperative in Roanoke in North Carolina or, or another cooperative that you’ve talked about in the toolkit that is a positive example of what happens when members do get engaged, when they’re able to use some of these tools, you know, whether it was from the toolkit or from the organizing in their own community. What are the things that have changed and what ways are those co-ops really helping their community?

Liz Veazey

Yeah, I think Roanoke is a real model that we talk about often their story. The Roanoke electric in Eastern North Carolina that serves a number of those persistent poverty counties that Chris mentioned and has a pretty large African American population in their territory. I think that some of the black folks in that community organized for years and eventually got some folks from their community on the board who then worked to hire one of the first black CEOs of an electric utility, Curtis Wynn, who now happens to be the president of the national rural electric cooperative association. But Curtis then sort of had a mandate to really serve his community and had a board that wanted to work with him to do that. And they have implemented an on-bill inclusive financing program, which John, I know you and ILSR and community power have done a lot of really good work in Minneapolis on, so shout out to you all on that.

But I think overall those programs really help increase access to energy efficiency. So they were able to do that and invest millions in their relatively poor, at least economically poor, community through that energy efficiency program. And they’re also working on community solar and I think some other increasing solar access in their community for all. And then connecting the broadband to demand management through, I think potentially like thermostats and shifting load that way by turning off people’s air conditioners or pre-cooling and also looking at connecting water heaters. So they’re, I think doing a lot that’s really increasing access to renewable energy and efficiency in their community and really driving the local economy with millions of dollars in investments. They also have a community foundation that has helped folks learn sustainable forestry practices and help folks hold onto their land. So those are just some of the things I think there may be even be more things that I don’t know about there, but I think that’s a real model.

There’s also Oachita electric in Southern Arkansas that’s doing similar on-bill inclusive financing for energy efficiency. They’ve been able to serve, I think they had a small number of apartment complexes, but they’ve been able to serve all of the multifamily housing in their territory, which is pretty amazing. Those folks are usually not able to access traditional energy efficiency programs and Ouachita has done some stuff around solar. The CEO of Oachita, I think they’re working on a similar sort of inclusive financing model to help people put solar on their roof too, which is really exciting. And the CEO there, Mark Casey, I think he also came out of member owners. They’re electing a new board who then hired a new CEO with a mandate to better serve the members. And he has said before that his mission is not to make money, it’s just serve his members.

So I think we can see when people really take seriously the cooperative principles and values and serving their members. There’s lots of really amazing things that they can bring to their communities. And then I was going to mention one more co-op. Kit Carson and John, I think you’re familiar with this example. Kit Carson in New Mexico is the co-op that was able to buy themselves out of their long-term contract with Tristate Generation and Transmission co-ops. So a larger co-op of co-ops, they decided they didn’t have a very good deal there. They bought themselves out of their contract around $37 million and they’re going to be 100% solar power during the day in a few years, and they’re going to be saving money and they’ve invested millions and millions in solar in their community. So I think that’s another really exciting example.

John Farrell

Yeah, I should add that we did have Luis Reyes participate in a podcast interview, or it was a kind of a round table conversation that we produced as a podcast. Sadly not one of our better audio quality podcasts, but you can get some more of that story about what Kit Carson has done from that. I guess I just wanted to flag one thing and then I want to come back to Chris with a question, but you talked about this on bill financing program and we’ll have a link to ILSR’s report that kind of explains what this is and there’s also a short little video that kind of explains how it works. But the basic concept is that the utility is saying we’re going to put our money out into the community to do these energy improvements on our member’s property. That’s going to lower their costs to have energy, but can also lower our costs of energy. Cause then we have to buy less energy at times when it’s expensive. So it’s this really interesting win-win deal backstopped by the federal government, which is giving money to these cops to do it. And it’s really surprising in some ways that like not every co-op in the entire country is doing it because it seems like it has such big benefits for these co-ops that have done it. Of course, I was hoping to toss this back to you with got a few examples here of co-ops that have done some really amazing things and a bunch of different areas. I guess I’m trying to think sort of generally, how do you see rural communities benefiting from the kind of organized membership that this toolkit is meant to inspire? Are there other things that these co-ops maybe haven’t done yet? You talked about, for example, these distressed areas in Appalachia. It’s even hard for people to have the energy to organize, but it feels like there could be some really significant benefits for their community, for their local economy in taking advantage of this tool kit and and to getting engaged because of these institutions are so central to those communities.

Chris Woolery

Sure. Yeah. Again, I like to put this into my local and personal context. I work with six rural electric co-ops in Appalachian Kentucky. We do deliver tariffed on-bill residential efficiency financing. And that came about in part due to a years long engagements with on behalf of co-op you KPC the generation and transmission co-op that they own in common and their communities. So going back all the way back to early 2010s and teens in which he KPC proposed a coal fired new electric plant, just one County away from my home. And the community members did not want to see that happen in many cases. And so there was a fight that happened, there was a lawsuit, there was organizing and eventually the Smith Plant idea was closed. They did not proceed and build that coal-fired electric plant. And I would say that there’s a good chance that they probably are glad in hindsight that they did not do so.

Part of the fallout from that was something called the DSM collaborative, the demand side managed collaborative in which the KPC their distribution co-ops and stakeholders in the communities had a conversation over a period of years on how to do efficiency to deliver efficiency and, and, and renewables to members in Kentucky. And so that led directly to one of the first utility, in fact the first utility scale solar farm in Kentucky that you can see from the interstate in Clark County where that Smith plant had been proposed and the KPC set on the stage at the governor’s conference on energy and environment that that those two things were directly related, that demand side management collaborative and that solar farm came from engagement with the community. And so that’s just another example and that I’m not sure if we would be doing on bill financing if those community members hadn’t done the hard work and the organizing of what had been for years before we even proposed that idea. And so that brings us to tariff on-bill. This is not a silver bullet by any means, but when you can give folks access to financing for residential efficiency programs, it’s like a silver BB in rural Kentucky. You can get more affordable homes, more comfortable, more healthy and durable homes, homes that are worth more by having the co-ops invest in those homes with projects that literally pay for themselves over time and create a net cash flow. And so that means we have been able to invest over two and a half million dollars, three, 320 energy efficiency retrofits right here in Eastern Kentucky with low risk investments that went directly to low local contractors for implementation and are now creating net cashflows for over 300 households in Kentucky. You know the question that comes to mind, the obvious question you already said John. Why isn’t everybody doing this?

And I think it really boils down to a little bit of inertia and changing marketplace. These rural electric coops are seeing flat to declining sales for the first time in their history. It’s pretty hard to, to come to them with an idea that begins with, Hey, let’s figure out how to sell less of your product. And so it’s great that we’re having conversations like this on podcasts like yours where folks can come to understand the tremendous opportunities in here in this, and those real electric co-ops are not going to move unless their members and the communities asked them to, and if they do, there’s no end to what can happen.

John Farrell

So I’m going to give both of you a chance to answer this question, but if I’ve been listening to this podcast and have been thinking, Hey, maybe I’m a member of an electric co-op, maybe my electric company is a cooperative and I would love them to do some of these initiatives that I’ve been hearing about. What’s the first thing that I should do (after listening to this podcast of course, and then reviewing it on Apple podcast or Stitcher) Liz, I’ll throw it to you.

Liz Veazey

Thanks, John. I think there are a couple of things I guess I would say, I think one of the first things would be talking to others in your community and figuring out, do people know they’re member owners? Are there issues that people with the co-op, what would people be interested in organizing a campaign around? So you know, that could be that there’s a really high fee for reconnection. It could be that people want to bring more solar or energy efficiency to the community. So I think that’s one piece that’s important. And then talking to the co-op or accessing information from the co-op website. Sometimes co-op websites have a lot of information, sometimes they don’t. But there’s a list of things that may be useful in terms of getting your co-ops bylaws and figuring out how the elections work and when the annual meeting is, when are the board meetings and our members allowed to attend? Where does your electrical electricity come from? So that may include who is a co-op buying power from, how do they generate electricity? Can you produce any electricity locally? We’ve seen a range of contracts from the tri-state contracts, so that’s like around 42 co-ops in Colorado and New Mexico, Nebraska, and Wyoming. They have like a 5% ability to generate power locally. And then some have almost no right to generate power locally. So that may be something you want to understand. You can access your co-op’s nine 90 and see how much your board members make and figure out the names of the board members if that’s not available on the cooperative site. Those are just some of the things that I think might be useful to learn about when you’re starting to get going.

John Farrell

Listen, before I let you wrap up, is there any kind of organization of member owners where I could tap into resources and ask questions of people who have maybe gone through this process already?

Liz Veazey

Oh thanks John. Yeah, We Own It. The organization that I worked for is a great resource as well and we have a lot of information on our website and I’m happy for people to reach out to me, Liz – [email protected] and as well there’s also the electric co-op toolkit that we were mentioning that has a lot of the same resources and that is electric co-op organizing all one word, no dashes or spaces, electriccooporganizing.org so I encourage people to check that out as well. Thanks John.

John Farrell

Yeah, of course. Hey Chris, what do you think would be the first thing that folks should do? I really have enjoyed your stories about your personal experience and feel like maybe there’s something in that for folks about how they should get started, but definitely answer it in any way you feel.

Chris Woolery

thanks. That’s great. Yeah, I’ll go there. You know, I’m a resource hoarder. That’s why I was so interested in this project. You know, I have files and lists of links on my computer and now they’re out there for others to access along with a bunch of other resources that some fantastic folks helped us put together. So I just want to give a shout out to the New Economy Coalition and to some of those other rural electric co-op organizing groups that have been doing this work and helping Liz and myself and my coworker Rachel put together the toolkit and that’s where I would go if I was just getting interested in this. I would want to see those resources. I would want to get a handle on what’s available, what has and can be done. So those success stories are great. Inspiration and get your wheels turning to figure out what your community needs and to know that it is doable. And then you might be lucky enough to be in a place where you can connect directly to folks that are already doing the work. Like Kentucky is for the Commonwealth and Northern Plains Resource Council. There are so many other organizations that worked on it and continue to work on it. So is there a base building organization that’s doing work on this? Like Iowa Citizens for Community Change, ICCI, or a more information type organization like Appalachian Voices. And so first thing after I looked at that tool kit, I would want to be making some local connections as possible to folks that are already in the work. And if not, then you can connect with likeminded folks in your place and learn from those other organizations. Kentuckians for the Commonwealth developed what’s called the power house party and so we’d be happy to share how we got folks together and talked about educating people about their rural electric co-ops on how they can be involved and what’s the potential for that. We’ve done that and so connect to folks that are doing it either in your place or elsewhere so that you can bring them home. That’s what I would do first.

John Farrell

Well Liz, Chris, thanks so much. I just want to mention again, the rural electric cooperative toolkit is that electriccooporganizing.org no spaces, no dashes, all lower case. Liz, Chris, thank you so much for your work on this project and for taking the time to talk with me today about it.

Chris Woolery Thank you very much for having me, it’s been a pleasure.

Liz Veazey

Thanks John.

John Farrell

This is John Farrell, director of ILSR RS energy democracy initiative. I was speaking with Chris Woolery from the Mountain Association for Community Economic Development in Kentucky and Liz Veazey from the co-op member organizing hub We Own It about the recently released rural electric cooperative toolkit. Check out the show page for links to more resources about cooperatives, including information on inclusive on-bill energy financing, and interviews with co-op leaders. Learn more about how communities drive local climate action and clean energy with the interactive community power map and community power toolkit, both available from the Institute for Local Self-Reliance and I L S R.org. That is I L S r.org. While you’re at our website, you can also find summaries of more than 80 past episodes of the Local Energy Rules podcast. Until next time, where we’re going to be talking with leaders from Burlington, Vermont about their successful effort to reach 100% renewable electricity, keep your energy local and thanks for listening.