The CEO of the Kentucky Association of Electric Cooperatives talks about the history of rural electrification and the continued importance of co-ops to rural communities.
August 6, 2007 — During NRECA’s legislative conference in May, Ron Sheets was interviewed by Chuck Mraz, host of “Front Page,” a half-hour talk show on Morehead State Public Radio.
Chuck Mraz: “The Office of Management and Budget hopes to end a low-interest loan program that has been helping rural electric co-ops around the nation provide power to their clientele….”
Ron Sheets: “The frustration that we have is that all electric utilities receive various degrees of financial assistance through the federal government, and the basis for ours is that we serve an area of the state where there’s only generally about 8 to 9 customers per mile of electric line compared with investor-owned utilities … they serve about 30 customers per mile and municipal – city – utilities serve about 50.
“So it’s a like the U.S. Postal system, if you charge based on the number of consumers per mile of electric line, strictly, the rates would be astronomically higher. Ours are higher somewhat than other utility providers, even with the assistance we receive.
“If you removed the rural electrification program from the landscape, the only thing that could happen is that the rates would have to be increased by whatever successive agency was moved in … to provide the electricity to the people who now receive it from the co-ops.
“The real danger … is that if the funds were cut off, getting the money at all with some co-ops could be a real problem. It’s less of a problem when you go through a government agency with whom you have had a relationship for 70 years. You go to new providers of financing and all the red tape you’ve got to go through to get a new lender, et cetera, is just tremendous. And when you’re talking about electricity – respirators in a hospital that need the power tomorrow or today, you can’t suffer those kinds of delays.
“This is a business that is the most complicated industrial process in the world…. A power plant with us cost hundreds of millions and in most cases billions of dollars – it is not an inexpensive proposition – and you have to have access to money.”