By Tom Kleckner

LITTLE ROCK, Ark. — During the Great Depression, it was the newly formed electric cooperatives that electrified much of the rural U.S. Now, the co-ops want to replicate that accomplishment by bringing their customers broadband Internet access.

“There are parallels between broadband today and the lack of electricity 80 years ago,” Mel Coleman, CEO of North Arkansas Electric Cooperative and president of the National Rural Electric Cooperative Association’s board of directors, said during a speech at the Clinton School of Public Service on Sept. 6.

“Reliable, high-speed Internet access is critical for attracting new employers to small communities,” Coleman said. “What employer would want to set up in a community where you’re getting 3 or 5 or 10 megabits a second? [Rural communities] are in desperate need of an economic boost. Think what it could do for education, health care and, yes, for all the Amazon shoppers.”

Coleman said his and two other Arkansas co-ops are “hanging fiber as we speak,” as are other electric cooperatives across the country. He hopes to have his first connected members in January.

Meanwhile NRECA, the co-op’s trade association based in D.C., is seeking federal financing help to “ensure that all Americans have access to affordable broadband services,” Coleman said.

It’s another way co-ops are serving the little guy, as they have been since the 1930s, said Coleman, who also used his speech to tell the co-ops’ history and to make their case against EPA’s Clean Power Plan.

“The history of the co-op movement demonstrates good things can happen when the government partners with private enterprise to solve big problems,” he said. “The American spirit of electric co-ops is not just a relic of the Depression era. It lives and breathes across rural America today.”

NRECA represents more than 900 cooperatives in 47 states. These nonprofits serve 42 million customers and operate or maintain more than half the nation’s grid. The largest is in Texas (Pedernales Electric Cooperative, with 260,000 members), and the smallest is in Alaska (INN Electric Cooperative, with 285 members).

Earlier this summer, NRECA hired former seven-term U.S. Rep. Jim Matheson (D-Utah) as CEO to help represent its interests. In addition to lobbying for broadband funding and fighting the CPP, NRECA also is seeking relief from mandatory capacity markets. (See Little Love for PJM in Capacity Market Debate.)

‘Darkness’

As Coleman recounted the electric co-op’s beginnings, he said investor-owned utilities were reluctant to extend their lines into sparsely populated rural areas. As a result, he said, “A vast majority of rural America sat in darkness.”

“The 1920s were roaring for some people, but not for American farms. Less than 3% of farmers had electric power,” Coleman said. “You can imagine milking cows in a wooden barn, with straw floor, and a kerosene lamp waiting to be kicked over.”

At the height of the Great Depression in 1935, President Franklin Roosevelt secured $100 million for rural electrification as a part of a $5 billion public works bill. The next year, Congress passed the Rural Electrification Act (REA), which used cash incentives as a carrot to the IOUs, Coleman said.

“Their grand plan consisted of taking money and hooking up a few customers in easy-to-serve places … it was clear the power companies had no interest in serving rural areas.”

Coleman said it wasn’t until the first REA loans were extended to the handful of co-ops at the time that rural electrification became a reality. The first REA-financed poles were set in Ohio in November 1935, and the first REA-produced power line went into service the following year in Marfa, Texas. By 1936, 140 electric co-ops were in operation in 26 states and by 1940, they were serving more than a million customers.

NRECA was formed in 1942, and it quickly began taking on the big industry interests who scoffed at the little co-ops.

“One of the NRECA’s first tasks was to disprove the allegations made by the investor-owned utilities,” Coleman said. “We were able to show that electrifying farms actually played a viable role in the war effort, by those farms producing more food than farms could without electricity.”

When World War II ended, half of America’s farms had electricity.

“Think about what a remarkable feat it was just to electrify rural America,” Coleman said. “Millions of miles of line, stretched across 75% of the nation’s land mass, all of it done with incentives, not mandates — incentives that were paid back in full, on time, and with interest.”

Clean Power Plan = Job Losses?

Coleman said NRECA and the co-ops are taking the same approach in their opposition to the CPP. In February, the Supreme Court stayed the plan pending resolution of legal challenges by the association and multiple states. Oral arguments are scheduled before the D.C. Circuit Court of Appeals for Sept. 27.

An NRECA study says a 10% increase in electricity prices as a result of CPP compliance would cause annual job losses of 360,000 between 2020 and 2040 in areas served by co-ops. The study estimates a $1 trillion hit to GDP by 2040.

Other studies have suggested compliance costs could be minimal if natural gas prices remain low. (See PJM: Regional Plan Cuts Costs, but Gas Prices are Wild Card for CPP Compliance.) For its part, EPA contends the CPP will have health and climate benefits of $55 billion to $93 billion per year in 2030, “far outweighing the costs of $7.3 billion to $8.8 billion.”

“As a movement that had its origins in the Depression era, and one that was formed to serve some of the nation’s most economically disenfranchised citizens, electric co-ops are sensitive to regulations,” Coleman said. “We are very sensitive to mandates. We’re very sensitive to any regulation or mandate that could impact the affordability of the service we supply to our members.”

Coleman noted electric co-ops serve 327 of the nation’s 353 poorest counties, or “93% of the nation’s most economically vulnerable places.”

“Many of those folks can’t afford to see their power bill go up. They’re honest, hard-working folks living paycheck to paycheck. A $10-20 increase in the electric bill may not be a lot for those of us in this room, but I can tell you we have members for whom that’s a lot of money.”

Coleman told a story of a 90-year-old member of his North Arkansas Electric Cooperative, who told him she had figured out that by taking her medication every other day, she would be able to pay her electric bill.

“Our concern is the person on the other side of the meter,” he said. “One of the arguments used by supporters of the [CPP] is that the cost to shut down coal-fired power plants will be absorbed by the [plant owners] and their Wall Street investors. Well, that may be true for the investor-owned, but that’s not true for co-ops. The problem is, the owners of our company are not a bunch of faceless Wall Street investors. They’re farmers and ranchers and teachers and veterans and retirees.”

Coal Dependent

He pointed out co-ops are heavily dependent on coal-fired generation because of a “previous government mandate,” the Powerplant and Industrial Fuel Use Act of 1978. Prompted by the 1973 oil crisis and the natural gas curtailments of the mid-1970s, the legislation encouraged the use of coal, nuclear power and alternative fuels in new plants. Provisions restricting the use of natural gas by industrial users and electric utilities were repealed in 1987.

“Power plants are not short-term investments,” Coleman said. “With maintenance and upgrades for the latest technology, the useful life for a power plant extends many decades. Upgrades are typically financed by long-term debt. It could be years before those debts are paid off. To retire a plant while it still has a mortgage will effectively force those co-ops members to pay for that same power twice.”

That’s not to say co-ops aren’t embracing renewable energy, Coleman said.

He listed wind, solar and biomass as being critical elements in the association’s “all-of-the-above” approach to fuels, and briefly detailed several individual co-op initiatives related to solar technology, community energy storage and carbon capture.

“The common thread to all these projects is they’re responding to local challenges,” he said. “Co-ops face change, we face challenge. The good news is, the American spirit is in the heart of every co-op.

“Electric co-ops have long been innovators in the industry. Our smaller size makes us focus on new ideas and how they affect our members. We try new things all the time, and when one co-op discovers something that works, they share it with all of us.”

All for the little guy.