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What
Are Electric Cooperatives?
Electric cooperatives are:
- private independent electric utility
businesses
- incorporated under the laws of the states in which they
operate
- established to provide at-cost electric
service
- owned by the consumers they
serve
- governed by a board of directors elected from the membership, which sets policies and
procedures that are implemented by the cooperatives' professional
staff
Most electric co-ops are distribution cooperatives that deliver electricity to the consumer. Some
are generation and transmission cooperatives that both generate and transmit electricity to meet
the power needs of distribution co-ops.
In addition to electric service, many electric co-ops are
involved in community development and revitalization projects, e.g., small business development and jobs creation, improvement of water
and sewer systems, and assistance in delivery of health care and educational services.
What Makes Cooperatives Different?
Cooperatives are operated to provide at-cost electric service to the consumer-owners. On the
other hand, investor-owned utilities that are not co-ops are operated to maximize profit for the
shareholders. A co-op's net margin above expenses and reserves does not belong to the utility;
it belongs to the individual consumer-owners of the co-op. The margins must either be used to
improve or maintain operations, or be distributed to those who use the co-op's products or
services.
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