What is a Co-Op?

Cooperatives are...

Private independent electric utility businesses
Incorporated under the laws of the states in which they operate
Established to provide at-cost electric service
Owned by the members they serve
Governed by a board of trustees elected from the membership, which sets policies and procedures that are implemented by the cooperatives’ professional staff
Distribution cooperatives deliver electricity to the member
Generation and transmission cooperatives (G&Ts) generate and transmit electricity to
distribution co-ops.

How cooperatives work

Electric cooperatives are private, non-profit corporations owned by their consumer-members. They are similar in concept to other consumer-owned businesses; including farm produce marketing co-ops and news gathering and reporting co-ops, like the Associated Press.

Essentially, each consumer of the cooperative is a member, with one vote in the affairs of the cooperative. Bylaws, adopted by the members, set forth their rights and responsibilities and lay out the guidelines that assure a democratic organization. Members elect directors to serve on a Board of Trustees, and an annual meeting is held to conduct the business of the cooperative. Local boards employ a professional manager for the co-op, and the manager then has the duty of hiring trained personnel to perform the work necessary for the co-op to function.

The local cooperative Board establishes rates, based upon what it actually costs to provide dependable electric service, and to meet payment schedules on loans. Rates are designed so that revenues exceed expenses. This “margin” is allocated back to members of the cooperative in the form of capital credits.

Members receive money back based on the amount of electricity they have used during the allocation period. This return of capital maintains the non-profit status of the cooperative.

In addition to electric service, many electric co-ops are involved in community development and revitalization projects, e.g., small business development and job creation, improvement of water and sewer systems, and assistance in delivery of health care and educational services.

Seven Cooperative Principles

Adherence to the seven cooperative principles is what makes cooperatives different.

Voluntary and Open Membership - Cooperatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political, or religious discrimination.
Democratic Member Control - Cooperatives are democratic organizations controlled by their members, who actively participate in setting policies and making decisions. The elected representatives are accountable to the membership. In primary cooperatives, members have equal voting rights (one member, one vote) and cooperatives at other levels are organized in a democratic manner.
Members' Economic Participation - Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing the cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefitting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership.
Autonomy and Independence - Cooperatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy.
Education, Training, and Information - Cooperatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their cooperatives. They inform the general public, particularly young people and opinion leaders, about the nature and benefits of cooperation.
Cooperation Among Cooperatives - Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional, and international structures.
Concern for Community - While focusing on member needs, cooperatives work for the sustainable development of their communities through policies accepted by their members.