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While rural cooperatives have different structures and oversight than larger utilities, they are not immune to the dramatic changes impacting the energy sector.
In addition to increasing pressure to cut carbon emissions, many co-ops have suffered flat or falling demand for electricity for years, as well as a dwindling customer base.
A report from the Institute for Local Self-Reliance (ILSR) outlines many of the challenges co-ops face and how to navigate them.
Released earlier this year, Re-Membering The Electric Cooperative, points out that individual co-ops rely on larger generation and transmission cooperatives ranking among the most carbon intensive in the nation. Seven of 10 of the nation’s most polluting electric utilities serve co-ops.
The nation’s 900 co-ops serve 42 million people, delivering 11 percent of the nation’s electricity. While a small player on the energy landscape they loom large in terms of actual coverage area, serving 75 percent of the nation’s land mass and maintaining a network consisting of 42 percent of all the power lines.
The ILSR’s John Farrell and his co-authors suggest a chief problem is members of co-ops fail to participate in their governance. If more members engaged, co-ops would likely begin to feel pressure to dedicate more resources to renewable energy.
Unlike investor-owned utilities, co-ops are technically owned by members who receive and pay for power, and are paid dividends in the event of excess revenue. However, few board elections ever get more than 10 percent of the membership to vote.
In addition, the report said long-term contracts with large coal-burning utilities – lasting as long as decades – prohibit the purchase of other greener, outside sources.
Matt Grimley, one of the authors of the report, said ILSR came to study the co-op sector after speaking to their more activist members, many of whom advocate for greater investment in renewable energy and customer engagement.
Some co-op members have even pulled together advocacy groups. Grimley points to Connexus Future, composed of Connexus Energy members, which encouraged “environmentally friendly power generation,” according to its now-idled blog.
Connexus opened a 245 kW community solar garden last year.
Adding services to retain members
Minnesota Rural Electric Association director of government affairs and general counsel Jim Horan read ILSR’s study and spoke to Midwest Energy News about how his organization is handling the challenges raised in the report.
Over the past decade the number of co-ops in the state has dropped from 61 to 45 through mergers. “Everyone is doing more with generally a lot less,” in terms of staff, Horan said.
He concedes the old way of connecting with members – through a membership kit, an annual meeting with a meal and gift cards – is evolving.
“How we interact, and how we engage, is changing,” Horan said. “The line you hear a lot in co-ops is their customers are the ones who remember the lights coming on. Well, most of those folks aren’t around anymore.
“We’ve spent a lot of time figuring out how to get them more involved in governance and learning about what they want the co-ops to do – how do they want us involved in wind, or solar, or broadband. We’re trying to get more engagement with members.”
To that end, MREA members have worked with behavioral energy specialists such as OPower to devise contests and other approaches to engage members in energy efficiency and reduction. The programs of Wright-Hennepin Cooperative Electric Association have been covered by Midwest Energy News and others. Some of co-ops have added online voting as a way to reach more members, he added.
Getting away from coal
The issue of co-ops relying on coal-based energy sources nationally is largely true in Minnesota, too, though that situation has begun to change. Great River Energy, a generation and transmission utility that powers the state’s co-ops, allows its members to generate up to five percent of their own energy.
In addition, GRE is piloting solar at several sites and has seen many members install community solar gardens on their own that have proven successful.
Farrell’s report points to a unique development in which three Minnesota cooperatives have begun selling solar energy back to their generation and transmission cooperative, Dairyland Power Cooperative.
Because co-ops do not get tax credits the opportunity to build solar can be limited without government grants – in this case, from the federal government. That leaves few coops with the financial resources, or even buyers, for renewable energy.
Many co-ops have added large fixed charges to the bills of customers producing solar energy. Horan and MREA members have argued solar puts a burden on aging infrastructure that all customers have to pay for.
Another issue co-ops share with others in the power industry is a dwindling talent pool. Many – perhaps a majority – of co-op employees will retire within the next decade and the workers available to fill their roles may be in short supply, he said.
So what does the future hold for co-ops? Horan is an optimist. A slew of new chief executive officers seem willing to try new things, he said.
Moreover, the native Minnesotan worked in public policy positions before returning after spending five years working at a cooperative in eastern Oregon. One reason Horan returned is to be in a state with a progressive energy policy.
“Minnesota has a great collaborative policy model,” he said. “Minnesota is mentioned in the same breath as California and New York when you talk about energy policy.
“We are at the cutting edge of where the energy world is going to and where the utility sector is going to go. I can’t think of a better place to engage in this.”