Utility cooperative

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A utility cooperative is a type of cooperative that is tasked with the delivery of a public utility such as electricity, water or telecommunications to its members. Profits are either reinvested for infrastructure or distributed to members in the form of "capital credits", which are essentially dividends paid on a member's investment into the cooperative.

Each customer is a member and owner of the business with an equal say as every other member of the cooperative, unlike investor-owned utilities where the amount of say is governed by the number of shares held.

Many such cooperatives exist in the rural United States, and were created by the New Deal to bring electric power and telephone service to rural areas, when the nearest investor-owned utility would not provide service, believing there would be insufficient revenue to justify the capital expenditures required. These include electric membership corporations (EMCs) - also called rural electric cooperatives (RECs). Many electric cooperatives have banded together to form their own wholesale power cooperatives, often called G & Ts, for generation and transmission, to supply their member-owners with electricity.

Many utility cooperatives strive to bring the best service at the lowest possible cost, but often the high cost of maintaining the infrastructure needed to cover large, rural areas without the support of large cities as a rich customer base causes prices to be high. However, a few such co-ops have managed to tap into urban markets (due to growth into previously rural territory served by the co-ops) and have proven to be very cost-effective.

In Finland the telephone network was largely built by telephone cooperatives. The largest cooperative, known originally as the Helsinki Telephone Association (now Elisa Oyj) was founded in 1882.

Contents

[edit] Seven Principles of Cooperatives

Several cooperatives list on their respective websites the Seven Cooperative Principles (also known as the Rochdale Principles) listed below, which are a general statement of how a cooperative operates (as opposed to traditional investor owned utilities):

  • Voluntary and Open Membership -- Cooperatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.
  • Democratic Member Control -- Cooperatives are democratic organizations controlled by their members, who actively participate in setting policies and making decisions. The elected representatives are accountable to the membership. In primary cooperatives, members have equal voting rights (one member, one vote) and cooperatives at other levels are organized in a democratic manner.
  • Members’ Economic Participation -- Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing the cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership.
  • Autonomy and Independence -- Cooperatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy.
  • Education, Training, and Information -- Cooperatives provide education and training for their members, elected representatives, managers and employees so they can contribute effectively to the development of their cooperatives. They inform the general public, particularly young people and opinion leaders, about the nature and benefits of cooperation.
  • Cooperation Among Cooperatives -- Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.
  • Concern for Community -- While focusing on member needs, cooperatives work for the sustainable development of their communities through policies accepted by their members. (One of the ways that cooperatives and their member-owners participate is through Operation Roundup, whereby a member can voluntarily have their electric bill rounded up to the next highest dollar with the difference placed in a fund to be distributed to local charities[1]. For example, a customer participating in the plan with a bill of $105.37 would see a bill for $106.00, and the remaining $0.63 credited to the fund.)

[edit] References

  1. ^ Operation Roundup

[edit] See also

[edit] External links

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Co-operatives
Types of Cooperatives
The Rochdale Principles
Political and Economic Theories
Key Theorists
Organizations