Because Access Energy Cooperative is a cooperative, we often refer to “the cooperative difference.” The differences between electric co-ops and other electric utilities range from the nomenclature used—co-ops serve “members” or “consumers,” not “customers”—to the business model itself. For example, electric co-ops operate on a not-for-profit basis. Revenues above operating costs, called “margins,” are returned to members in the form of patronage dividends. Your board of directors is proud of the fact that we have returned dividends to members each year since 1986. In the U.S., there are two other kinds of not-for-profit electric providers: public utility districts (PUDs) and public power districts (PPDs), neither of which any are located in Iowa. There are also two other types of electric utilities: city-owned municipal electric systems and profit-driven investor-owned utilities, both of which are located in Iowa.
Electric cooperatives are not-for-profit. Cooperatives choose directors to serve on our board from our membership—those people served by the co-op. We are required by state law to hold annual membership meetings (we hope you come to our 75th this year August 6th). Rules for PUDs and PPDs are local government units—similar to school districts—are less rigid and are not required to hold annual meetings or allocate patronage dividends. In addition, their directors (commissioners in the case of PUDs) are elected on the state ballot. Candidates only need to reside within the PPD/PUD’s boundaries to serve on a board; they do not have to receive power from the utility.
Access Energy Cooperative does not receive Federal financial assistance. Federal assistance for some electric co-ops comes in the form of low-interest loans from the Rural Utilities Service (RUS), formerly the Rural Electrification Administration. Aside from aiding in construction of critical infrastructure that keeps electric service reliable and electric rates affordable, RUS financing remains important to those cooperatives because household incomes in co-op service territories run about 11 percent lower than the national average.
Co-ops serve an average of 7.4 consumers per mile of line, over which they collect annual revenue of about $14,900. Nationally, electric co-ops pay $1.4 billion in state and local taxes each year.
Municipal electric systems
Municipal electric systems are distribution utilities owned by a city, borough, or other incorporated community. As public entities, they can levy taxes, issue government bonds, and adopt and enforce rules and regulations.
Not-for-profit municipals serve the most consumers per mile of line, an average of 48, and collect an average of $113,301 per mile of line. The federal government subsidies municipals, too—when cities or boroughs issue tax-exempt bonds, interest paid to bond owners is not taxed. The cost of this benefit in 2003 (the last year data is available) was $909 million, or $55 per consumer.
Investor-owned utilities, or IOUs, are governed by and generate profits for shareholders who do not necessarily live in the utility’s service area. IOUs average 34 customers and $75,498 in revenue per mile of line.
In virtually every case, IOUs charge electric rates that include amounts for presumed federal tax liabilities. However, available tax breaks allow IOUs to retain most of the taxes collected, a total of roughly $107 billion to date. At a cost to the government of $4.6 billion in 2010, this federal subsidy to IOUs works out to about $44 per customer.
Back to the cooperative difference
Access Energy Cooperative is here to provide safe, reliable, efficient and environmentally responsible electric power. But at the core, it’s really about improving the quality of life in the communities we serve. That’s the main difference—the cooperative difference.
For more information on how Access Energy Cooperative makes a difference in Iowa, visit www.accessenergycoop.com.