New Paths for Rural Electric Co-op Revival — Episode 196 of Local Energy Rules

Date: 9 Nov 2023 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

This is a defining moment for rural communities and the clean energy transition.

For this episode of the Local Energy Rules Podcast, host John Farrell is joined by Frances Sawyer, founder of Pleiades Strategy, and Maria McCoy, researcher at ILSR. They discuss ILSR’s new report on rural electric co-ops and how federal dollars can meet the growing momentum of co-op member-owners organizing around affordability, clean energy, and local control.

Listen to the full episode and explore more resources below — including a transcript and summary of the conversation.

Frances Sawyer: This is beyond electricity generation at this point. You think about the foundational role as an economic driver, as a service provider in rural communities that cooperatives provide and that is just expanding over the next five years. As we look at everything that’s happening with electrification, both the transportation and building electrification.
John Farrell: Can you imagine having to buy all your food from the same place for the next 75 years? If you were a rural electric cooperative, you may have a contract for your electricity supply that lasts that long and it could be costly. Fortunately, along with the Inflation Reduction Act, new federal programs are giving cooperatives a chance to break free from the chains of their long-term contracts, or at least to get a better deal. Joining me in November, 2023, Frances Sawyer of Pleiades Strategy and Maria McCoy from the Institute for Local Self-Reliance walked me through how co-ops have been handcuffed in long-term contracts and how some have broken free, the subject of a new ILSR report, and how new federal policy is making the largest investment in rural electricity since the New Deal. 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 about monopoly power, energy democracy, and how communities can take charge to transform the energy system. Maria and Frances, welcome to Local Energy Rules.
Frances Sawyer: Thank you so much. It’s awesome to be with you.
Maria McCoy: Yeah, thanks John.
John Farrell: So I’ll turn to you first, Frances, how did you get yourself into climate and clean energy work? What is it on your path that led you to hear being on the podcast to talk about rural electric cooperatives and clean energy?
Frances Sawyer: Thanks, John, and I love this question. It’s one of my favorite parts of the podcast, getting to hear everybody’s origin story, listening to previous episodes. I feel like I’ve always been immersed in climate and the intersection with energy. I remember writing letters in high school, but where I first got introduced to rural electric cooperatives and the power that they have was visiting my grandmother’s town that she grew up in Greenville, Georgia, which is right down the road from Warm Springs, which is where the little White House was, and that was the vacation home of FDR who signed the Rural Electrification Act from his living room there. And so we would go visit this museum and you learn about the history of rural electrification, how the cities had power and the farming communities and rural areas did not because the utilities wouldn’t deliver power out where it didn’t make economic sense. And rural cooperatives really supercharged by that new deal investment came in to fill that gap and that was core to the stories that I learned as a kid with my family and the power and importance of that really just continues to ring through as we look at the energy transition today.
John Farrell: That’s great. I love you sharing about how you learned about it. I remember I was invited to speak in Texas at the Pedernales Electric Cooperative, which is I think one of the in the country and the largest one in Texas, and I remember there’s this beautiful plaque outside their offices that basically says, we got our start with farmers putting in five bucks together along with this government backed financing in order to make this work. To me, that was just such a beautiful anecdote about the origins and the purpose of real electric cooperatives, and I think you’ve told that story really well too in your history. So I can imagine that has held with you pretty closely. Maria, you might’ve expected that you get on the podcast and because you’re a staff at ILSR, I wasn’t going to ask you this question, but I decided that I should because I actually don’t know the answer to it even though we’ve worked together for four years. So Maria, what got you into climate and clean energy work?
Maria McCoy: I will try to cobble an answer together. Pretty much my family always had an appreciation for green spaces and natural places and yeah, I went to college and got involved in climate and did an environmental studies degree and knew that I wanted to land somewhere with social impact. And what drew me to ILSR and a community focus, I think having these smaller wins and smaller community-based solutions is a lot more encouraging than going up against national policy fights and beating your head against that wall. So excited to be here working at that intersection.
John Farrell: That’s great. Thanks for indulging me, Maria. Appreciate it. So Frances, I want to start off by taking advantage of you being here to ask you about this idea of democratic governance and long-term contracts as barriers to co-ops. So I mean, your story is awesome because it is about how co-ops started, right? This ultimate idea of self-reliance that these communities not being served by big utilities are getting a leg up from the federal government and being able to put their resources together, even their labor together to serve themselves. We wrote a report almost a decade ago, it has a terrible punny title because Matt Grimley who wrote it loves puns. But I was just curious if what you think of this general argument that ILSR has put forward that the struggles with democratic governance and these long-term contracts have been the biggest barriers to cooperatives capturing the value of clean energy?
Frances Sawyer: Absolutely, and it’s been so grateful in my learnings from that 2016 report that you and Matt put together, the one that you and Maria just put out this week. I think that this base story of cooperatives, they’re so rooted in the cooperative values and that governance and we know that that doesn’t always play out in the real world. And as it’s been played out to date over the decades and reinvigorating that there’s so much organizing energy right now around reinvigorating those democratic processes and it’s very tied to the desire that member owners have for a clean energy future, for more affordable bills, and a say in that decision making process where they do have that stake on paper. The contract piece is also fundamental and I think that when you look at the types of long-term contracts that so many distribution cooperatives find themselves in, and y’all do a great job of unwinding this history of how as energy facilities largely big coal, big gas facilities got bigger and bigger, distribution co-ops had to band together to form cooperatives of cooperatives, these generation and transmission cooperatives in order to functionally have a credit rating that enabled them to invest in one of those larger facilities and in order to recognize that and get the financial deals at the time that included signing these very long-term contracts, some that are older than I am and stretch 30, 40 years in the future to purchase power from their G&Ts.

And those contracts really in a changing energy world in which clean energy is more modular. We have so many more options and pieces of the portfolio coming together in a resource mix today are really for closing options for cooperatives. I think there’s also probably been a spin cycle where the existence of those long-term contracts, because you’re basically taking certain decisions out of that local decision maker suite of options, helps encourage a slowdown in the democracy that we see because the big decisions around what your energy mix and generation is going to be are ones that don’t feel materially addressable year in year out because of those long-term commitments that have been made.

The other piece that I would add to this matrix though, when it comes specifically to clean energy deployment, is that because of the design of the tax credits for wind and solar over the last decade plus, which have been available to entities that have a taxable liability, cooperatives have been structurally cut from a policy perspective out of owning wind and solar the same way that they had owned other sources of coal and gas generation. I think that one of the most exciting things that we’ve seen in this last year with the Inflation Reduction Act is that there is now a pathway open for the direct access of those tax credits and that opens huge doors of possibility for cooperatives.

John Farrell: That’s great, Frances, I’m so glad that you mentioned the tax credits as one of those additional barriers because even though co-ops are in some cases in some of the best resource areas for things like wind and solar, they have been operating at that 30% tax credit disadvantage to their investor owned peers.
Frances Sawyer: And 30% is quite the disadvantage.
John Farrell: Yes, yes indeed. I also just have to say for the record that when Frances mentioned these contracts are older than she is, that would’ve been true if she was her grandma’s age too. We have contracts that are 75 years or more and she is nowhere near her grandmother age when to say these contracts are very, very long. So on the subject of contracts, lemme pivot over to you to Maria to talk about ILSR’S new report, the Rural Cooperative Rift. What have cooperatives been able to do if they break free, of which has been true for some of them and were these successes due to some of that revitalized co-op democracy that Frances was talking about has been taking place?
Maria McCoy: I’d say the first distribution co-op we look to for breaking its supply contract would be Kit Carson Electric in New Mexico. And that co-op negotiated its release from Tri-state generation and transmission back in 2016 and was kind of the first to do this successfully. And so Kit Carson immediately got a 15% savings from its new supplier, and even though it had to pay this $37 million exit fee to Tri-State, the co-op has projected that it’ll save anywhere from 50 to $70 million over the 10 year length of its new contract with this new supplier. And so all that money can stay in the community and build the local economy. Additionally, with the new contract Kit Carson members can generate as much energy locally as they want. And so the co-op has set and now reached its goal to generate a hundred percent of its daytime energy with solar.

And on that piece about co-op democracy, we’ve heard on this podcast from Kit Carson general manager Luis Reyes, and he explained how co-op member owners are asking more from their utilities. They want to have these choices over their energy sources, they want more clean energy and they’re not willing to sit by while rates increase higher and higher. So when Kit Carson broke its contract with Tri-State, it’s really because that’s what the member owners wanted to do.

Another success story that we do look at in the report would then be Delta Montrose Electric Association, which followed Kit Carson’s lead and broke its contract with Tri-State in 2020. So Delta Montrose also expects to save millions of dollars under a new contract and the members were looking to lower their costs again, have a cleaner energy portfolio and increase their own energy resilience.

John Farrell: There’s a couple of these examples both with Tri-State based out in the mountain west in Colorado and a couple other states in general. Maria, did you find that long-term contracts are still being restricting distribution cooperatives? What has made them these contracts so restrictive?
Maria McCoy: Yeah, many distribution co-ops are still stuck in the long-term contracts or sometimes called “all requirements” contracts because they have to buy nearly all the electricity they need from their generation and transmission supplier. The examples in this report are few compared to the hundreds and hundreds of distribution co-ops across this country. And so as Frances described a bit earlier, a lot of the weight behind these contracts is due to that coal plant debt that the G&Ts are carrying. So they needed to guarantee the sales to their distribution customers in order to finance these power plants. But now that the power plants have become uneconomical, these distribution co-ops are stuck with rising prices and there are opportunities, as I expect Frances will describe more shortly, for co-ops to unload these burdensome coal plants. There’s also, since Kit Carson and Doer Montrose left their contracts, some generation and transmission suppliers are recognizing the discontent of their member cooperatives and they’re offering more flexibility or different kinds of contracts even to preserve those relationships rather than risk losing more members.
John Farrell: We’re going to take a short break. When we come back, I ask my guests about the new federal programs and what they’re unlocking for cooperatives. We also talk further about opportunities for co-op democracy and how co-op members can learn more. You are listening to a Local Energy Rules podcast with Frances Sawyer of Pleiades Strategy and Maria McCoy from the Institute for Local Self-Reliance.

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John Farrell: Thanks, Maria. That’s really helpful to understand the context of how common it is for distribution co-ops to be able to break away. Lemme go ahead and pivot to Frances then. So there has been recent federal legislation that is finally providing financial incentives to cooperatives for clean energy investments. So Frances, we already touched a little bit on the tax credit. Can you talk about how that’s changed and also about what else was on the table for cooperatives in terms of incentives for clean energy? And I’m just curious too, if you could talk about in addition to how do they help them maybe financially make this shift to clean energy? How, if at all, are the federal policy changes helping with this issue around democracy and the restrictions of long-term contracts?
Frances Sawyer: So many good questions bundled in there and I think where my mind immediately goes is back to that plaque at Pedernales that you talked about where it’s federal investment coming in to support local needs and ambitions. And I think that that is a moment that we’re exactly in right now. The Inflation Reduction Act, which passed last year was and is the largest investment in rural electricity and energy systems that we have seen since that original New Deal. And it really does open up a host of pathways to tackle some of the thornier challenges that Maria described with coal debt, with the transition to clean energy and the inclusion, particularly in very specifically within the bill of cooperatives to really take a leading role here. A couple of the programs, I think one of the amazing things that there’s multiple pools of capital that are available for these projects.

We talked a little bit about the tax credits, we’ll probably circle back to those because that is a long tail uncapped source of capital that co-ops now have direct access to via elective pay. And in addition, you have these flagship opportunities from the US Department of Agriculture called the New Era program and PACE, which together provide about $11 billion for cooperatives and rural communities to further their energy transition. The letter of interest phase for each of these programs closed about a month ago. And so over the summer, if you knew anyone involved with a rural electric cooperative, they were likely heads down thinking through what their application could and should be for taking advantage of this pot of federal money that could be used as a grant for up to 25% of your total project value.

And the USDA received a huge sweeping wave of interest through this program. We’ve got 157 proposals that came in from nearly every single state and Puerto Rico together, these support 750 high quality clean energy projects and this is about two x what the program itself can handle from a funding perspective. And so you see the hunger to put these dollars to work and to bring resources in to further the energy transition and take advantage of these new resources. What I think is particularly important here, one of the things that I know that all of us here care very deeply about is lower energy bills and serving disadvantaged communities and making sure that investments don’t go just to the places that are already resource rich. These projects, more than 50% of those letters indicated that they’re going to serve distressed disadvantaged energy or tribal communities. Those are also places where the tax credits are combinable with these investments from USDA to be able to further those projects to fruition.

As we look at that portfolio, to me it represents really a sea change in what’s possible. Some of the coal debt that Maria talked about that could be included in these projects. And as USDA weighs them, they’re going to be looking at the emissions reduction potential as well as a couple of other factors to determine which ones to move forward with. And those projects that have those highest emissions reductions, which is really looking at that coal, are going to be in a really good place to be competitive within this competitive program. And so it’s an exciting moment where we have a down payment to be able to tackle some of the thornier challenges in the sector.

John Farrell: It’s so great to hear about all of the opportunity and as well the interest. Those of us who have followed co-ops a long time saw that when some other federal policies came through that were more focused on mandates than on money, like the Obama Clean Power Plan that you often found co-ops in their newsletters to their members talking about how they were going to fight those kinds of policies. And so it’s really lovely to see such a sea change in terms of that attitude and the real interest in saying, yeah, actually what we really wanted was a helping hand, not somebody to come slap us down for what we were doing. So I think that’s very exciting.

I want to pivot a little bit. I think one of the things that makes me optimistic at least like I said, is about the level of interest in this. So I want to kind of go back to this issue of co-op democracy and this question of how much is this being driven by members? I think there are broad surveys of folks that largely live in rural areas that would be served by electric cooperatives and clean energy scores very highly. So I’m just kind of curious, we’re seeing this shift to clean energy driven in part by the financial incentives, I think by a desire to get out from under contracts that are expensive for members. I’m going to go to Frances first here. Do you feel like cooperatives are set up to reflect their member interests very well? They’re exempt from state regulation, unlike monopoly invest owned utilities. How has that exemption helped and maybe in terms of that structure and the realization of democracy, how has it maybe hurt?

Frances Sawyer: It works in both directions with cooperatives in terms of the lack of state regulation and PUC process for many cooperatives means that that board that is directly elected by the community, it really does have the say in what happens within their service territory. So when they’re looking at projects around weatherization, energy efficiency, electric vehicle charging infrastructure and rolling out those co-benefits that can help at the grid edge power, different facets of folks’ lives, they have flexibility to drive forward those programs. And in response to membership conversations and demand of input, you can see that happening in places like Roanoke in North Carolina and Holy Cross, where you have really, really inventive programs that are able to deliver that value to the member owner that is asked for by the community and built with community process in mind the same time, you don’t have the same oversight that you might in a larger investor owned state regulated utility.

And so that allows for shenanigans to happen as well. It allows for power lock and for a sort of erosion of democratic principles and access that we see in far too many cooperatives. And so thinking about things like transparency, open meeting minutes, just like the base information and contact that folks have with the board of directors, understanding the base fact that somebody can vote for their board of directors members. Y’all’s 2016 report, I think highlighted that over 70% of cooperatives, you’ll have less than 10% turnout in a board election. Many of these seats get appointment or recess appointees and they kind of chug along without having that sort of influx of oversight and accountability that comes from having really robust democracy practices. One of the most exciting things I’ve seen in the advocacy work around this has been the efforts to scorecard in different regions cooperatives and really highlighting what best practices are across democracy, across clean energy, across the inclusionary practices, around electrification and other program delivery that cooperatives can put in place. And I think that daylight really matters and showing up locally really, really matters.

John Farrell: I love that you mentioned those scorecards. I know one that piqued my interest actually back when we were first doing this report back in 2016 in Montana, and then I think there’s been one that I am familiar with in Minnesota as well. We’ll do a quick Google search in the show notes we’ll have some links to some of those different scorecards if folks are looking for a template or if there’s a scorecard already in their state, happy to share that. Those are really wonderful.
Frances Sawyer: And I think going back to the programs coming out of USDA new era, when cooperatives are putting forth their application, you’ve got your utility team that is really looking at their resource mix. They’re being asked to basically look a decade out at all the projects that they’re expected to need. And we know that we’re living in a moment of we load growth where for meeting the needs of electrification, meeting the needs of industrial electricity, meeting the needs of things like AI and data centers that are coming. Utility directors are really having the thorny job of managing a very complex and changing energy system in a time of increasing load. And then you match that with the impacts of climate change where the grid is under potter and colder stress than it has been. And that’s a huge responsibility. And the folks who really take those community leadership roles and are working from a staff level to keep the lights on, keep bills low, there is a lot of moving pieces that they’re being asked to handle.

And I think that as we are really infusing so much more complexity into grid management, that community voice becomes all the more important because it helps to prioritize and it helps to showcase and kind of keep a north star on the direction that a utility can go. And what I think is really helpful within the Inflation Reduction Act programs is many of them, including new era, require something called a community benefit plan as part of that full package that a utility is putting together. And this is a chance and an opportunity to really build stronger democratic processes within the project deployment process itself. And so these community benefit plans are on paper. They’re supposed to be contracts that are negotiated as part of your project that is hand in hand designed with community members and member owners of the utilities. It’s looking at things like how is community engaged in the planning, how is labor engaged? How are we investing in the local workforce to deliver these projects, and how is that workforce being supported with good paying jobs and the security that they need? How are we advancing diversity, equity, inclusion and accessibility in program design and in resource allocation and the placement of projects? And also a focus on implementing the Justice 40 initiative, which is really looking to direct resources from these federal programs into the communities that have been left behind in previous economic transformations. The opportunity and the structures are baked into the process, but making it happen is going to take local leadership and it’s not going to happen without the involvement of member owners and folks who are organizing and speaking directly to their cooperative.

John Farrell: That’s really great to hear about the way that it’s been baked into the process for the federal incentives, all of these different pieces, both the community engagement and the wide range of the factors to consider.
Maria McCoy: Frances just gave a really thorough answer. And in the regulation piece, the idea is that rural electric cooperatives do not need state regulation if there’s effective oversight from their members. But again, as we’ve seen in co-op democracy, like all other democracies, there’s a lot of things that both incidentally and intentionally get in the way of that democratic process. And so yeah, we’ll make sure to put the scorecards by CURE and Energy Democracy Y’all on our show page and some other things as well. There is some room for states to set limits, one example being Colorado’s law on co-op transparency that we have covered in a previous Local Energy Rules episode. And states can also require co-ops to conduct resource planning and file those plans. So things like that to set some limits.
John Farrell: I’m glad you mentioned that podcast, Maria. And also I think it’s worth pointing out that the kinds of requirements that the state are putting on, and Frances mentioned this earlier, are for very minimal things like posting meeting minutes from your board meeting or allowing members to attend the board meeting of the members that they have elected. So sometimes some very simple things in terms of democratic access that are not being respected but really need to be in order to guarantee that those co-ops really can be truthful when they’re saying we don’t need to be regulated because we have local control.

On this topic of invigorating co-op democracy, there have been some really nice efforts and tools put together. I’m thinking of the Rural Electric Cooperative Toolkit. Frances, I’ll go to you first. How do you think that those kinds of tools can help broadly with the clean energy investment question, but maybe more narrowly just around that idea of co-op democracy?

Frances Sawyer: Yeah, I think tools and education are so crucial to this, and there has been so much place-based organizing energy, and that energy is really what was able to help drive home and get these federal investments as far as they have come today. And so I think when we look at tools like the Rural Electric Cooperative Toolkit, teaching folks the basics of governance, being able to help hone to the various pieces, how decisions are made, what the possibilities are, what we’re fighting for and what is possible when cooperative energy democracy is realized, that vision is something that folks can take make their own and then take locally to drive it into the board processes that are determining what their utility is doing. And so I think they’re really, really key and the scorecards are, again, piece of that landscape and it’s really showing a difference where it’s been actualized.
John Farrell: So Frances, let me just ask you kind of a broad question. What do you see happening here in the next five years for co-ops? You’ve got a lot of these proposals into the federal government to USDA, to these federal incentive programs to help drive clean energy adoption. It’s obviously even beyond electricity generation. You have energy efficiency, you have transportation. Paint us a picture of what the opportunity looks like. Yeah. What’s likely to happen here in the next few years as co-ops are able to take these plans and put them into action?
Frances Sawyer: Absolutely. And you’re spot on that this is beyond electricity generation at this point. You think about the foundational role as an economic driver, as a service provider in rural communities that cooperatives provide, and that is just expanding over the next five years. As we look at everything that’s happening with electrification, both the transportation and building electrification, there’s been huge efforts with cooperatives around beneficial electrification where the movement towards electric vehicles and siting that charging infrastructure in an appropriate way. Partnerships with schools that cooperatives like Dakota Electric have put together to build electric school bus charging infrastructure to clean up the diesel buses that kids ride on their way to school every day home and heating electrification, which can be paired with energy efficiency and weatherization efforts to lower bills, tighten a building envelope, make it more healthy and move air in new ways, while also developing that local workforce that’s going to put that into action on the ground.

And cooperatives are going to be at the center of all of that. And we see pilots and full-blown programs looking across these new technologies and cooperatives across the country, and I think they’re going to be just supercharged by this latest round of federal investments that we see. And so we’ve got New ERA and others looking at that large scale generation challenge. There’s also the opportunity for distribution cooperatives to be a part of that program, and those projects could include community solar, could include solar plus storage and other grid edge investments that really take advantage of the fact that as we move into clean power systems, things are getting more modular and you can really look at both the demand and the supply of energy in new ways to find creative solutions for challenges that both the utility face and the consumers face leading to better outcomes and economics for both.

John Farrell: That’s so great. I’m excited because I’m imagining a lot of podcast interviews I’m going to be able to have in the next five years about the different programs that cooperatives have been adopting. Maybe not with that specifically in mind, so I’m going to ask you a wrap up question for each of you. The simple one that maybe be the harder one is what’s your favorite cooperative name, any cooperative that you can think of, why is it your favorite? And then where can people find more information about the work that you’ve done on cooperatives if they want to learn more about co-op democracy or long-term contracts or whatever. Maria, I’ll pick on you first and then I’ll throw it over to Frances to wrap us up.
Maria McCoy: I guess what first comes to mind is New Hampshire Electric Cooperative. I learned about them recently when we interviewed Brian Callnan for the podcast, and they’re doing some exciting vehicle to grid programming.
John Farrell: And where can people find more information, Maria, about the rural cooperative rift and the long-term contracts issues?
Maria McCoy: Yeah, that would be on our website, and we’ll be linking in the show notes too.
John Farrell: folks. You heard it here.

Frances, what’s your favorite cooperative and where can folks go to find more information about the work that you do around rural electric cooperatives?

Frances Sawyer: Man, it’s so tough to choose just one. There’s over 800 and there’s pieces of this transformation happening in so many different corners. Yeah, I think what Roanoke is doing on EVs and efficiency, what Vermont is doing on solar and efficiency, what Holy Cross has been doing on process transparency and electrification and fire safety, there are so many bright spots across this landscape. And then as far as additional resources, the work that we’ve put together is on cooperative, and we keep that updated as well as we can with new resources on different topics related to the energy transition for cooperatives.
John Farrell: Well, Maria and Frances, thank you so much for taking the time to come talk about cooperatives and the really exciting opportunities unlocked by federal legislation and that co-ops are demonstrating when they are no longer chained by their long-term contracts. It was great to talk to both of you.
Frances Sawyer: Thank you so much for having us.
Maria McCoy: Yeah, thanks.
John Farrell: Thank you so much for listening to this episode of Local Energy Rules with Frances Sawyer of Pleiades Strategy and Maria McCoy from the Institute for Local Self-Reliance. On the show page, look for a link to Frances’s work on cooperative, as well as links to Maria’s new report for ILSR on the impacts of long-term contracts on cooperatives called to the Rural Cooperative Rift. We’ll also have links to many podcast interviews with leaders from rural electric cooperatives, including one with Brian Callnan at the New Hampshire Electric Cooperative, Luis Reyes from Kit Carson in New Mexico, and Brian Hannigan from Holy Cross Energy in Colorado. Local Energy Rules is produced by myself and Maria McCoy with editing provided by audio engineer Drew Birschbach. Tune back into Local Energy Rules every two weeks to hear how we can take on concentrated power to transform the energy system. Until next time, keep your energy local and thanks for listening.

Freeing Co-ops From Restrictive Contracts

In the push for rural electrification, cooperatives banded together into generation and transmission co-ops in order to finance power plants — often coal power plants. Now that building new renewables is cheaper than running existing coal plants in nearly all cases, electric cooperatives are in a difficult position.

Member-owners at distribution cooperatives want the flexibility to generate their own electricity and the savings that come from clean energy. Generation and transmission co-ops, however, need their members to continue paying off coal debt. ILSR explored this tension in a new report, The Rural Electric Rift: Cooperatives Split Over Clean Energy and Local Control.

Two of the examples highlighted in the report and this interview are Kit Carson Electric and Delta Montrose Electric Association. Both distribution co-ops broke their contracts with Tri-State Generation and Transmission in order to increase local control, pursue clean energy goals, and lower costs for members.

When Kit Carson broke its contract with Tri-State, it’s really because that’s what the member owners wanted to do.

— Maria McCoy

Organized Member-Owners Can Make Positive Change

Historically, co-ops have succumbed to many failings of democratic governance; co-ops are not all transparent about their decision-making processes, member-owners rarely vote, and some co-ops even employ practices that discourage voting (see ILSR’s 2016 report on electric cooperatives).

More recently, however, Sawyer has been encouraged by all of the work happening to organize and democratize cooperatives. She points to cooperative scorecards as excellent resources for member-owners — these include a Minnesota scorecard by CURE and Southeast scorecards by Energy Democracy Y’all.

As we are really infusing so much more complexity into grid management, that community voice becomes all the more important because it helps to prioritize and it helps to showcase and keep a north star on the direction that a utility can go.

— Frances Sawyer

Federal Opportunities for Cooperatives

Sawyer describes some of the opportunities newly available to rural electric cooperatives — what will be the largest investment in rural electricity since Franklin D. Roosevelt’s New Deal. Thanks to measures in the Inflation Reduction Act, co-ops are now eligible for the clean energy credits that were previously reserved for taxable entities. The U.S. Department of Agriculture is also offering the New ERA and PACE programs, which together make $11 billion available to cooperatives. Sawyer has elaborated on these opportunities at

We’ve got 157 proposals that came in from nearly every single state and Puerto Rico… about two [times] what the program itself can handle from a funding perspective. And so you see the hunger to put these dollars to work and to bring resources in to further the energy transition.

— Frances Sawyer

Episode Notes

See these resources for more behind the story:

For concrete examples of how towns and cities can take action toward gaining more control over their clean energy future, explore ILSR’s Community Power Toolkit.

Explore local and state policies and programs that help advance clean energy goals across the country, using ILSR’s interactive Community Power Map.

This is the 196th episode of Local Energy Rules, an ILSR podcast with Energy Democracy Director John Farrell, which shares stories of communities taking on concentrated power to transform the energy system.

Local Energy Rules is Produced by ILSR’s John Farrell and Maria McCoy. Audio engineering by Drew Birschbach.

This article originally posted at For timely updates, follow John Farrell on Twitter, our energy work on Facebook, or sign up to get the Energy Democracy weekly update.

Featured Photo Credit: U.S. Department of Agriculture via Flickr (CC BY 2.0)

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Maria McCoy is a Researcher with the Energy Democracy Initiative. In this role, she contributes to blog posts, podcasts, video content, and interactive features.