Electric Co-op History
Electric Cooperative History
The most famous of the early cooperatives was the Rochdale Cooperative, formed in Rochdale, England, in 1844. Although not the first cooperative, it was the first to be successful for a sustained period. This was primarily due to their operating principles, which became known as the Rochdale Principles. These principles are still the foundation of most cooperatives today.
The Rochdale Cooperative was formed because the members had a need. The electric cooperatives of today were formed 65 years ago because the members had a need. In the 1930's, the nation was in the throes of the Great Depression. Millions were without jobs and nearly all of rural America was without electricity. Those rural areas that did have electricity most likely had paid the power company from $2,000 to $3,000 per mile of line to get it there. And then, they paid nearly four times as much per kilowatt-hour (the average was 12 - 15 cents per kilowatt-hour) as did the city folks.
To entice electric companies to electrify rural America, President Franklin D. Roosevelt decided to offer low interest loans to those companies that would extend lines into the countryside. On May 11, 1935, President Roosevelt established the Rural Electrification Administration (REA) as an emergency agency through Executive Order 7037. A year later, Congress passed the Rural Electrification Act of 1936 and moved the agency to a more permanent status. The Act also gave the agency the authority to make $410,000,000 in loans to achieve rural electrification.
The first administrator of the REA, Morris Cooke, was a social-minded engineer who would suffer great disappointment. Mr. Cooke assumed that the power companies would avail themselves of the low interest loan money his agency had to offer in exchange for building lines to the country-side. Although 89% of the farms in the U.S. were without electricity, the power companies claimed there were few farms requiring electricity that were not served. In other words, they did not feel that rural America needed electricity.
REA's second administrator, John Carmody, (1937-1939) took a different approach to electrifying America. Instead of counting on the power companies, Mr. Carmody felt the farm people themselves would have to take the initiative. To determine the extent of interest, Mr. Carmody used county extension agents/farm advisors to publicize meetings and to send out letters. When interest became sufficient, those involved elected officers and directors from among themselves. In 1938, REA had approved $88 million in loans to rural cooperatives. By 1939, the total had grown to $227 million. Rural electrification was on its way!
Today, the REA, as we knew it, has been replaced by the Rural Utility Services, a department of the US Department of Agriculture. In a move to become more efficient in 1994, the U.S. Congress placed rural electric, water, telecommunications, and other rural oriented programs under the auspices of RUS.
The need that created the rural electric cooperatives has not been fulfilled. Yes, the majority of rural America does now have electric service. But the original need of improving the quality of life in rural America and ending the disparity between life in rural America and our cities is still our mission today. To that end, the electric cooperatives of today are still important, bringing energy, telecommunications, broadband, potable water and many other services to rural areas often overlooked by for-profit companies.