Electric Cooperatives are a distinct type of electricity provider that can, and should, merit separate treatment from other utility types in California. Retaining our autonomy to make decisions at the local level is essential to the electric cooperative business model.
Electric Cooperatives are not Investor-Owned Utilities, nor are they Publicly Owned Utilities, although there are several rural POUs that operate very similarly to electric cooperatives. Electric Cooperatives are owned and governed by the consumers who use its services. Democratically controlled and operated on a not-for-profit basis, a cooperative returns any margins to consumers on the basis of patronage. Since there are no investors, the locally elected boards of directors have the cooperative’s mission and purpose in mind: to provide safe, affordable, and reliable electric service in rural California.
California’s electric cooperatives are organized for the purpose of transmitting or distributing electricity exclusively to its consumers “at cost”[1]. In contrast, electrical corporations, and specifically IOUs, are defined with the specific purpose of selling power “for compensation”[2]. In essence, we cut out the middle-man investor and focus on the needs of our communities.
One of the fundamental reasons electric cooperatives were formed is the inherently higher cost of rural service, which was not as financially attractive to IOUs. The significantly more costly task of constructing, operating, and maintaining rural infrastructure, as well as restoring power outages across vast, rugged service areas is not a recipe for high profits. In fact, the Rural Electrification Administration was created as part of the New Deal in 1935, and electric cooperatives were designed to serve these rural consumers that were refused service by IOUs. The REA has since become the Rural Utilities Service, but the goal to provide low-cost financing to hard-to-serve populations remains the same.
Golden State Power Cooperative (GSPC) members maintain over 5,000 miles of power line and serve an average of less than 5 customers per mile of powerline; compared to 34 customers per mile of powerline for IOUs. Less density means less revenue per mile of infrastructure to maintain. Due to the higher cost of service and the small number of customers served, policy mandates can disproportionately impact our ratepayers. Since cooperatives sell power “at cost,” all costs are borne by the consumer.
GSPC is the statewide association which assists electric cooperative and POU members[3] to streamline and coordinate legislative and regulatory affairs so that the utility can focus on efficient operations to overcome the burden of maintaining rural electric service. To do that, members strive to continue to proactively address evolving industry and community challenges with innovative and cooperative solutions.
Our not-for-profit structure makes certain our decisions are made with long-term sustainability and stability in mind- not the need to cut corners to turn a quarterly profit. Local accountability ensure our consumers’ interests and safety are always at the forefront. We are invested in the communities we serve. We serve power for people, not for profit.
[1] Cal. Pub. Util. Code (PUC), section 2776.
[2] Cal. Pub. Util. Code (PUC), section 218.
[3] Electric cooperative members: Anza Electric Cooperative, Plumas-Sierra Rural Electric Cooperative, Surprise Valley Electric, and Valley Electric Association. POU member: Trinity Public Utilities District
