Colorado Rural Electric
Association
5400 N. Washington Street
Denver, CO 80216
Phone: (303) 455-2700
Fax: (303) 455-2807

The mission of the Colorado Rural Electric Association is to enhance and advance the interests of its member electric cooperatives through a united effort.

What Is an Electric Co-op?

• What Sets Co-ops Apart
• Comparing the Three Types of Electric Utilities
• Diversity of Colorado's Electric Co-ops
• Related Terms

Colorado’s 22 electric cooperatives have been supporting a Colorado way of life for the better part of a century. What began in the 1930s with rural neighbors banding together to bring their homes safe, affordable, reliable electric power has developed into a keystone of the state’s infrastructure.

Today, more than 1.25 million Coloradans depend on a cooperative for their electricity. Serving 70 percent of the land in Colorado, cooperatives reach every county but one. While commercial, industrial and agricultural businesses across the state also rely on electric co-ops, 85 percent of co-op customers are residential.

What Sets Co-ops Apart

The number of residential customers co-ops serve is just one of the things that set them apart from investor-owned and municipal utilities. The cooperative principles by which they operate, the diversity of their customer base, and their history of consumer advocacy and conservation also make co-ops different.

Cooperatives are member-driven, not profit-driven. Operating much like a grocery cooperative or a credit union, each electric cooperative is an independent utility owned by its customers. Unlike investor-owned utilities, cooperatives set their rates strictly to cover the cost of doing business. If annual revenues exceed costs, co-op members get a credit.

This willingness to forego profits helped electric co-ops take root in sparsely populated areas across the United States in the 1930s and 1940s. All of the 22 electric co-ops now operating in Colorado were created between 1936 and 1946. At the time, nine out of 10 rural homes had no electricity, and it was not profitable for investor-owned utilities to expand beyond the densely populated areas they served. Remote areas had too few customers to provide a return on the significant investment in infrastructure that was needed.  

The Rural Electrification Act of 1936 created a program to support the expansion of electric service to small communities, which included loans for electric cooperatives. As a result, the number of rural homes with electricity more than tripled in five years’ time.

Investor-owned utilities maintain about half of the nation’s distribution lines, publicly owned utilities maintain some 7 percent, and co-ops maintain 43 percent.

Today, electric cooperatives are the only U.S. utilities that rely on government and other loans to finance capital construction. Unlike municipal or investor-owned utilities, they do not receive tax-exempt financing or revenue bonds. Instead they repay loans monthly with interest.

Return to top

Comparing the Three Types of Electric Utilities

*Meters served grew from 588,023 to 659,147 in 2007

Colorado—Energy Information Administration State Electricity Profiles (2006)

U.S.—NRECA Strategic Analysis (2007) based on Energy Information Administration,

Rural Utilities Service, and Cooperatives Finance Corporation data

Population density is also a key factor in the operation of co-ops. The number of customers per mile of line has a significant effect on a utility’s operation and maintenance costs.

While the number of customers per mile averages 35 for investor-owned utilities and 46 for publicly owned utilities, co-ops typically serve 7.8 customers per mile. As a result, investor-owned utilities get almost six times the revenue-per-mile-of-line as cooperatives do, and revenue is even higher for public utilities. ($10,565 Co-ops; $62,665 IOUs; $86,302 Publics)

Cooperatives work because members essentially pay their own way. Their economic participation is one of the Cooperative Principles, also called Rochdale Principles, which are the foundation of electric co-ops. The third principle states: “Members contribute equitably to and democratically control the capital of their cooperative.” 

In return, cooperatives provide members with education, training and information to help them effectively develop their co-op. At the same time co-ops are focusing on member needs, they are also working for the sustainable development of their communities—again, Cooperative Principles.

Return to top

Diversity of Colorado’s Electric Co-ops

Because cooperatives are designed to meet their members’ needs, no two co-ops are the same. Colorado’s electric cooperatives serve a broad array of communities—from high country ski resorts to irrigated farmland on Colorado’s eastern plains. While some areas served by co-ops have abundant resources, five of the state’s six poorest counties also rely heavily on co-op power. The differences among co-ops are dramatic. For example, Holy Cross serves 10 times as many customers per mile as Southeast does. Similarly, while White River has 3,029 customers, Intermountain has 136,217. 

Diversity in resources, economy, size and density means cooperatives need the flexibility to meet their members’ needs in different ways. This is most apparent in the many ways Colorado’s co-ops promote conservation and energy efficiency among members. Every Colorado cooperative educates members about conservation and energy efficiency, using programs that range from in-home energy audits to online energy use calculators, to financial incentives for installing energy-efficient appliances.  

Conservation and energy efficiency are part of cooperatives’ heritage, and Colorado is no exception. Co-ops have been educating members about energy efficiency and conservation since they began in the 1930s. At the time, the limited capacity of co-ops made conservation a necessity. Today, because they aren’t working for profit, co-ops serve members is by keeping down the costs of building and maintaining distribution systems, which in turn keeps down members’ costs.

By saving energy, cooperative members are saving money as well as helping to build sustainable communities. At the same time, by helping members save energy, co-ops are helping Colorado achieve its clean energy goals. It is this type of systems thinking that has made Colorado’s electric co-ops viable enterprises for more than 70 years and will sustain them in the future.

Return to top

Related Terms

Investor-owned electric utilities are privately owned and have the fundamental objective of producing a return for their investors. They either distribute profits to stockholders as dividends or reinvest the profits. Most investor-owned electric utilities are operating companies that provide basic services for the generation, transmission, and distribution of electricity.

Publicly owned electric utilities are not-for-profit local government agencies established to provide service to their communities and nearby consumers at cost, returning excess funds to consumers in the form of community contributions, increased economies and efficiencies in operations, and reduced rates.

Electric energy is the amount of work that can be done by electricity. The unit of measure for electric energy is a watt-hour. Electric energy is measured over a period of time and has a time dimension as well as an energy dimension. The amount of electric energy produced or used during a specified period of time by a piece of electrical equipment is referred to as generation or consumption.

Electric power is the rate at which electricity does work—measured at a point in time, that is, with no time dimension. The unit of measure for electric power is a watt. The maximum amount of electric power that a piece of electrical equipment can accommodate is the capacity or capability of that equipment.

Additional Resources

• National Rural Electric Cooperative Association
• Cooperative Fesearch Network — The Coopertive Research Network monitors, evaluates and applies technologies that help electric co-ops control costs, improve productivity and enhance member-owners service.

Return to top

_____________________________________________________________________________________________________
Copyright © 2007 Colorado Rural Electric Association. All rights reserved. • Designed by: RNRDesign.net