To maintain a livable climate, the United States must make immediate and drastic changes to its energy policies. Perhaps the most important change is the need for a transition away from fossil fuels toward cleaner, more renewable sources of energy.
A new report by the Democracy Collaborative has found that community utilities — those that are publicly or cooperatively owned — are better suited for a green transition than their for-profit corporate counterparts. The report also found that many community utilities, as they currently exist, must be significantly reformed to fulfill their full potential.
Electric co-ops operate in pretty much the same way as investor-owned utilities companies, like PG&E. The key difference is that in the case of electric co-ps, it’s ratepayers — the people actually paying for and utilizing electricity — who act as owners, not out-of-touch shareholders.
“The shareholder, in the case of a cooperative, is you and your fellow community members.” — Johanna Bozuwa, executive director of The Climate and Community Project
As Johanna Bozuwa explained to Shareable, “that means that at the end of the day, electric co-ops are supposed to be beholden to their customers. Any of the revenues or benefits are supposed to benefit the customers.”
This is very different from an investor-owned utility model which looks to return profit to investors. It means that eclectic co-ops don’t have the same incentives that companies like PG&E have in terms of diverting money away from infrastructure investment and toward executive bonuses.
Another benefit of electric cooperatives is that they run on the principle of democracy. While investor-owned utilities operate on the traditional business structure of a top-down hierarchy, the electric co-op model gives ratepayers democratic control of their utility through a radical concept that you might have already heard of: voting.
Energy cooperatives already serve 30% of households in the United States. They’re rooted in place, provide a critical public service, and have a large economic impact. According to the report, this uniquely positions them to act as a powerful tool helping to “accelerate the energy transition in a way that builds community wealth and energy justice in our communities.” The report further outlines how community utilities meet the classic definition of “anchor institutions,” and thus should embrace this by integrating an “anchor mission” into their work in order to achieve their full potential while embracing their radical roots.
As a member of the Rural Power Coalition, Shareable has been helping to build bridges between different organizations and energy co-operatives, as well as helping to uplift messaging and policy proposals related to green energy led by energy cooperatives.
The Rural Power Coalition (RPC) is a group of place-based organizations representing rural electric cooperative member-owners from the five dirtiest electric cooperatives in the United States. The RPC sees a future for electric cooperatives that is grounded in justice, democracy, and resilience. To achieve this vision, the coalition has put forth a bold, yet common-sense proposal to help all rural electric cooperatives make this transition and build a clean energy system for every resident in their service areas.
Currently, energy cooperatives are situated in a promising position to affect real change, but a wide variety of reforms are necessary in order for them to become more responsive and lead the charge for the green transition. To do this most effectively, the authors of the Democracy Collaborative report provided the following 9 recommendations for leaders in the electric cooperative sector:
- Block Privatization. Block extractive and expansive “public-private partnerships” and other efforts to sell or lease community utility assets to for-profit corporations. Efforts could include ordinances or referendums banning sales or leases, amendments to state constitutions, or a federal-level prohibition on community utility sales.
- Deeper Democratic Governance. Unite around increasing democratic governance and control. Community utilities should incorporate innovative democratic approaches such as autonomous, community-based observatories. In particular, amend existing laws and regulations to maximize democratic participation, accountability, and transparency, and block capture by local elites.
- Renewable Energy Mandates. Set renewable/clean energy generation mandates that apply to community utilities, but which take into account both issues of scale and the additional economic and social benefits community utilities provide.
- Renewable Energy Financial Incentives. Federal, state, and local governments should reconsider the tax credit approach to incentivizing the generation of renewable energy and, at the least, provide community utilities with equivalent incentives in the form of grants and no-interest loans.
- Public Distributed Renewable Energy and Electrification. Invest in public distributed renewable energy, weatherization, and electrification programs. These should be done in-house with an explicit focus on providing local residents with pathways to quality employment in the utility; or in partnership with non-profit or democratically owned community-based organizations.
- Procurement programs. In-source contracts wherever possible, especially as it relates to renewable energy generation. When procurement from private sources is still necessary, community utilities should establish or expand procurement programs and goals that prioritize local businesses – especially MWBE companies and democratically owned firms (such as worker cooperatives) – in collaboration with the community. Provide financing and technical assistance to help create local procurement supply chains where they don’t yet exist.
- Public Banking and Finance. Establish public banks and other public financing mechanisms to provide services and support to community utilities, especially around decommissioning fossil fuel infrastructure and scaling up in-house renewable energy generation. Redirect community utility deposits and investments to non-profit community-serving financial entities like public banks and CDFIs where they exist.
- Supporting Local Innovation. Establish laws and regulations, especially at the federal level, that prevent states from blocking or “preempting” local innovations around community utilities, especially with regards to broadband internet services, progressive procurement and rate structures, and local municipalization campaigns.
- Public Finance for Shifting IOUs into Public and Cooperative Ownership. Local, state, and federal policymakers should create new financial and technical institutions capable of facilitating and supporting communities if they wish to take their utility into public or cooperative ownership.
The report suggests that one of the most significant barriers in moving toward green, renewable energy comes from the internal dynamics of many rural electric co-ops themselves. Erik Hatlestad of Minnesota-based Clean Up the River Environment (CURE) — a Rural Power Coalition member — is quoted in the report as decrying the fact that electric co-ops “have access to billions of dollars from rural development loan programs that they could make available for economic development in the form of grants or very low interest loans,” but often do not take advantage of these opportunities.
Further, Brianna Knisley, campaign manager for Appalachian Voices — another Rural Power Coalition member — states in the report that, in many cases, board members are entrenched, see little opposition during elections, and do not have a lot of technical knowledge about how utilities work. As such, “finding the utilities with more progressive leadership within staff is really the route to go with trying to get progressive programs.”
According to Bozuwa, we should be transferring energy into public hands in order to be able to fight for energy justice. As we do so, we can continue to learn from communities, implementing best practices for building new, publicly owned and cooperatively owned utilities that have climate justice in their mandate. “If we leverage community utilities and transform them, they could help shift a sizable portion of the grid toward an equitable energy economy.”
To find out more about how Shareable is working to uplift rural energy cooperatives’ potential to be a leading force in the transition to renewable energy, check out the Rural Power Coalition’s #RuralPower campaign and policy proposals for Congress here.