Cooperatives at a Crossroads

The Generation & TransmissionCooperative Model

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During the Industrial Revolution, electric utilities began growing in urban areas across the United States to meet a burgeoning demand for electricity. However, investor owned utilities refused to expand their services to rural areas, due to the high cost of building infrastructure in isolated areas, leaving rural Americans dependent on kerosene lanterns to light their homes. At last, the New Deal and the Rural Electrification Act of 1936 administered federal funds to spark the creation of distribution electric cooperatives (DEC) and provide electricity to rural areas.

DECs are member-owned non-profit organizations that are responsible for distributing reliable and affordable electricity to their individual member-owners. The electricity system encompasses three phases: power generation, high voltage transmission, and final distribution to individual consumers. While DECs are responsible for distribution, most purchase generation and transmission services from Generation & Transmission Cooperatives (G&Ts) through long-term power procurement contracts. A G&T is made up of DEC member-owners that collectively invest in generation and transmission infrastructure.

Generation & Transmission Co-ops

Distribution Co-ops

Co-op Member-Owners

Challenges and Opportunities for Clean Energy in Electric Cooperatives

Kayla Carey &Nathan StottlerUniversity of ColoradoMasters of the Environment

Misti Groves, AdvisorAutumn 2020

Co-ops in a Glance02

63G&TCo-ops in the US

56%of US landmass served by co-ops

42mCo-op members in the US

Other2.0%Nuclear15.0%

Renewables17.0%

Natural Gas27.0%

Coal39.0%

A Shifting Paradigm03 Purpose of the Project04An increasing number of DECs have begun to re-think the G&T model.

How does the current G&T model meet DECs’ needs?

What are the challenges and opportunities of co-op exits?

What role do co-ops play in the clean energy transition?

The guiding objective of this project is to accelarate a national-scale, clean energy transition with the target of limiting global climate change to 1.5 C. This project will develop a white paper focused on a narrow and impactful goal within the overall objective: analyzing how DEC needs, the G&T model, and cooperative exits impact the adoption rate of clean energy in rural communities. This analysis will take place through the lens of the following research questions:

834DistributionCo-ops in the US

897Total co-opsin the US

42%of US distribution lines ownedby co-ops

For just under a century, the partnership between G&Ts and DECs has adequately served the needs of rural Americans, largely due to the historically low cost of electricity generated from centrally-located, coal-fired power plants. However, as the costs of clean energy continue to fall, some contracts between DECs and G&Ts are resulting in higher rates for DEC members, restrictions on self-generation, and undesirable “dirty” energy mixes. For these reasons, the G&T model has prevented some DECs from meeting their needs and has left them dissatisfied with their partnership, leading them to seek the establishment of standards and pathways to exit their G&T contracts. These exits could have major effects on G&Ts and other DECs as they pursure their own clean energy goals.

U.S. Co-op Generation Mix, 2018U.S. Co-op Service TerritorySource: NRECA

Cooperatives at a Crossroads: Project Brief

Kayla Carey & Nathan Stottler 2

Methodology05

Stakeholder Interviews

Synthesis / Writing

Policy Review

Literature Review

Qualitative Coding

To begin, the team performed an in-depth literature and policy review to identify relevant sources and compile existing research and regulations. The team then conducted research interviews with industry experts, non-governmental organizations

Not a G&T Member29.4%

Member Pursuing Exit17.6%

G&T Member47.1%

G&T5.9%

Industry Group8.3%Government8.3%

Legal Scholar8.3%

Energy Scholar16.7%

Journalist8.3%

NGO33.3%

Other16.7%

G&T2.4%

DEC38.1%

Expert40.5%

NGO19.0%

Preliminary Results

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Several trends have emerged through the process of completing the methodology. These results will be more fully developed and detailed in the final white paper, to be published in December with the Getches-Wilkinson Center. The following are some preliminary takeaways from the research:

» Almost all co-ops have unique members and needs.» Almost all co-ops are reporting changing needs from their members.» Not all co-ops that have exited or are seeking exits have the same reasons for doing so.» G&Ts may not look the same in the near future.» Doubts about co-op exits accelerating the clean energy transition pervade in G&T member co-ops.

Cooperatives at a Crossroads would not be possible without the generous participation of its many interview participants, whose anonymity will be maintained. Additionally, it has been supported by many staff and faculty at CU Boulder, especially the project advisor, Misti Groves. Dr. Rudy Kahsar and Dr. Lydia Lawhon have also given support through editing and advising.

Acknowledgements

Interviewee Overview Co-op Breakdown Expert/NGO Breakdown

Minnesota

Wisconsin

Indiana

Georgia

South Dakota

Wyoming

Nebraska

Colorado

New Mexico

3

1

1

1

1

2

1

23

3

Interviewee Locations

Washington, D.C.1

Cooperatives at a Crossroads: Project Brief

Kayla Carey & Nathan Stottler 3

The students have partnered with Guzman Energy, a full-service wholesale power provider to work on various projects and form connections in the industry. This research paper and their work with Guzman are separate. The paper is self-directed and will be an unbiased examination of the G&T model.

(NGOs), and executives from co-ops around the country. The interview scripts were designed to eliminate bias and procure both quantifiable and rich responses. The team sought diversity in culture, geography, demographics, and co-op size

in their interviewees. Next, the interviews will be analyzed with qualitative coding to identify core trends and relations in the data. Finally, the findings will be synthesized in a white paper that will aid leaders and inform policy in co-op decision making.

Kentucky1