Washington, D.C. – Testifying before the House Committee on Oversight and Government Reform, Glenn English, CEO of the National Rural Electric Cooperative (NRECA), welcomed the opportunity to give Committee members a lesson on one of the least understood sectors of the electric industry:  rural electric cooperatives. 

Democratic member control is one of the seven principles that set cooperatives apart.  As English explained to the Committee, “Electric cooperative directors are elected by cooperative members.  Most cooperatives permit directors to be nominated by a nominating committee, or by one or more petitions signed by a specific number of member-owners.”

English pointed out that, not unlike Members of Congress, directors of electric cooperatives are held accountable by the consumer-owners who elect them. 

Unlike investor-owned utilities, “cooperatives are owned and democratically controlled by their members – the people who use the cooperative’s services or buy its goods….  Consumer cooperatives are not motivated by profit, but rather by meeting their members’ needs for affordable and high quality goods or services.” 

The advantage of the cooperative business model is reflected in the positive perceptions of both consumer members and Wall Street analysts. 

“Electric cooperatives enjoy the highest average customer satisfaction rating in the industry, according to the University of Michigan’s American Customer Satisfaction Survey….” English noted.  Electric cooperatives receive an average rating of 81 out of a possible 100 for customer satisfaction, compared to an average of 74 for investor-owned utilities.

Financial analysts also give cooperatives high ratings:  For example, 85 percent of electric co-ops have A- or higher ratings, compared with only 18 percent of investor-owned utilities.  Most share-holder owned utilities are in the BBB- to BBB+ category; while most of the rated electric co-ops are in the A- to AA category.  The National Rural Utilities Cooperative Finance Corporation ( CFC), whose credit rating reflects the combined strength of the electric cooperative program, is rated A+.

Today electric cooperatives serve more than 41 million consumers in 47 states.  While electric cooperatives serve 12 percent of the population, they maintain 42 percent of the nation’s electric electricity distribution lines.  There are 850 distribution cooperatives in America; the largest serve over 200,000 member-owners, the smallest serve barely 100.  The average-sized distribution cooperative serves 12,467 member-owners.

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