Just curious: ever wonder who the “members” are when reading or listening to a story involving Mohave Electric Cooperative?
While it can be a bit more complex, any person who paid a membership fee and currently purchases power from MEC, is not only a customer, but a member.
The cooperative difference is membership and ownership.
Cooperatives are owned by their members, who are also the customers. An electric cooperative is a not-for-profit enterprise that came to be in the 1930s because Investor-Owned Utilities found it too costly to provide service to rural areas.
With the profit potential much higher, about 90 percent of those living in urban areas had electricity in 1945 while the opposite was true for those in rural areas.
The creation of the Rural Electrification Administration by President Franklin D. Roosevelt authorized the establishment of electric cooperatives and, by about 1955, few homes were without electricity.
To better understand the cost-and-demand side of electrical service, consider that cooperatives today average seven members per mile of line as opposed to 35 for IOUs and generate about $16,000 per mile compared to over $75,000.
There are now more than 900 cooperatives in 47 states, providing electric service to 56 percent of the nation’s landmass and serving approximately 42 million people.
So, what’s the difference?
IOUs are for profit and need to appease stockholders while cooperatives have member-owners and follow a democratic process. Members can vote and participate in policy-making. Those who comprise the board of directors of a cooperative are also members.
With an IOU, only investors, who may or may not be customers, have a say in running the company.
When a cooperative makes more than the cost of doing business, the margin – revenues that surpass the cost of providing service – is reserved as capital credits. They are used to maintain, build, and upgrade a cooperative’s infrastructure, improving reliability for its members. They can also support other service needs and programs.
If the cooperative has a positive margin and meets lenders’ requirements, the board of directors may vote, once a year, to retire, or pay out, a portion of available capital credits to members when doing so does not harm the cooperative financially.
In the past three years, MEC has paid more than $4.3 million in capital credits to members in the form of a check or billing credit.
Each member’s voice matters and they have an opportunity to partake in the democratic process. It is the members who vote for board members who represent their district and help define policy.
A cooperative is designed to benefit its members not only in providing reliable service, but in the programs it manages.