# Presentation: 334759

## The National Rural Electric Cooperative Association

- NRECA

## Rural Electric Co-op Movement in the U.S.A. 

**Rural Electric Co-op ****Movement in the U.S.A.**

**Notes:**
The presentation will briefly describe the evolution of the rural electric cooperative movement in the U.S.: the rise of  RE coops and associated support cooperative organizations.

## Early History

**Early History**

- Electricity introducedin the cities in the 1880sand then expanded intosuburbs.
- But power companiesfelt that farmers couldneither make productiveuse of electricity norafford to pay for this service.

**Notes:**
After the invention of generators, motors, and electric lights, . . . (first ).  The rural population remained in the dark.

## Day-to-day liferemained labor-intensive and difficult, with little change from one generation to the next. 

**Early History**** ****(Cont.)**

## Early History (Cont.)

- The deteriorating quality of life in many rural areas lead to migration to the cities.

**Notes:**
In the early 1930s, dry weather and poor agricultural techniques led to sandstorms covering the central states . . . (first ) . .   This made rural areas even less attractive and less productive.

## Only 11% of rural population had access to electricity.
Where available, rural families had to paid full cost of extension, $10,000 to $15,000 per kilometer.

- Where available, rural families had to paid full cost of extension, $10,000 to $15,000 per kilometer.

**Rural America by the Early ‘30s**

## Rural American in Early ‘30s (Cont.)

- To solve this problem, some rural families joined together to address the problem cooperatively and share costs.
- By 1930, coops were established in only 13 states. Costs remained high, but significant positive impacts of electrification were being felt.

**Notes:**
No one interested in assisting the rural population so . . . (first ) . . .  They bought power from existing powerplants (or installed their own) and distributed power to the neighbors.
Half a century after electrification of the urban areas, (second )

## Formation of the REA

- Pres. Roosevelt, convinced of  socio-economic benefits of electrification, created the rural electrification administration (REA) in 1935 to address the high cost of electrification by providing loans to remove a major obstacle.
- But private companies still convinced that no profits could be made from rural electrification.
- So with assistance from the REA, farmers themselves took up the task of electrification and co-op movement quickly expanded.

## The REA Approach

- Low-interest, long-term loans
- Standardized distribution designs
- Cooperative principles—owned and managed by those they serve
- Area coverage

**Notes:**
REA approach had several important features:
loans
standardized design: (see later)
cooperatives: Rural population eager for electricity and cooperative approach harnessed this energy
area coverage:  Typically electrification supplied only the larger loads in rural areas.  Area coverage included idea that everyone who wanted electricity and could afford it could have it.  Costs averaged over everyone.

## The REA Approach: Designs (Cont.)

- Use of standardized construction units facilitates line design, materials procurement, and construction.

- Single-phase angle support

**Notes:**
Each unit is a package including all necessary hardware for its construction.  By a line staker specifying that a kilometer of line to be build required eight A1 (tangent structure), two A2 (less than 20° angle), and one A5 (deadend) construction unit, all the hardware was specified and could be gathered at the warehouse and costed by the financial department.

## The REA Approach: Designs (Cont.)

- Two-phase (V-phase) tangent support

## The REA Approach: Designs (Cont.)

- Three-phase tangent  support

## The REA Approach: Designs (Cont.)

**The REA Approach: Designs ****(Cont.)**

- Wide use of single-phase transformers and single-phase medium-voltage distribution lines.

**Notes:**
The previous system in use in the U.S. was based on the European system.  
This typically involves three-phase lines, a large transformer at each load center and an extensive low-voltage distribution system.  The requires large (costly) conductor (or results in large losses) and more involved and costly three-phase construction and protection.
New U.S. design uses smaller transformers and service areas, resulting in smaller conductor.  Also uses single-phase power, resulting in cheaper construction (see figure).  Three single-phase transformers used rather than storing separate set of three-phase transformers.  Permits room for later expansion when load increases.
Single-phase power fully adequate for almost all needs.  High power motors are also available to address the exception.

## The REA Approach: Designs (Cont.)

- Emphasis on assembly-line techniques quickens pace of line construction.
- To safeguard investment, the REA ensured the use of quality hardware and materials by preparing lists of equipment and materials (and suppliers) which meet its specifications for quality.

- Many of the REA (now RUS) manuals and guidelines can be obtained from the Internet: http://www.usda.gov/rus/electric/index.htm

## The REA Approach: Designs (Cont.)

- Results:
- Reduced construction costs by 2/3
- Permits rapid project construction
- Facilitates reconstruction after disastrous storms with minimum delay

**Notes:**
Reducing cost of construction permitted the construction of systems with no significant government subsidy, except for low-interest loans(at about the government cost of money) and tax-free status for cooperatives.  In part of the country, some co-op also receive preference in purchasing low-cost hydropower.  

## The REA Approach: Cooperatives

- Increase efficiency and reduce cost of project implementation through involvement of co-op members.

**Notes:**
Contribution of labor in construction, operation, etc.
Contribute right-of-way, meter reading, etc.
Keeping money within the community as opposed to private companies who take it out for their shareholders.
Ownership of, and concern for, proper use of the system, reducing theft, etc.

## Rural Electric Co-ops Today

- About 960 co-ops operate in 46 states and cover more than 70 % of the land area in the U.S.

- 

## Rural Electric Co-ops Today (Cont.)

- Serve over 11% of U.S. population or 34 million people
- Operate nearly 4 million kilometers or 44 %  of nation’s distribution line and 60,000 kilometers of transmission lines
- Employ 60,000 people
- Assets total $70 billion

## Profile of a Distribution Coop

- Average system size is 12,000 consumers, ranging from 160 to 130,000 consumers
- Average of 60 full-time employees per co-op, ranging from 4 to 460
- Average of 4 consumers per kilometer of line but as low as 0.8 consumers per kilometer
- Average residential consumption is 1,000 kWh/mo
- Average assets of $30 million per co-op

## Comparison of U.S. Electric Utilities

- Source: 1996 EIA data

**Notes:**
This table shows the low revenues raised by rural electric cooperative in comparison to that raised by private companies or municipals.  
          (Table)
The low revenues from rural electric cooperatives challenges the co-ops to reduce their cost within unduly increasing the tariff to their customers.
The fact that the cost of electricity to rural consumers is roughly the same as that for urban population (10 cents per kWh) in spite of low returns illustrates the scale of their success.

## Other Co-op Services

- Supply of oil, diesel fuel, propane gas, etc,
- Home security systems
- Access to cable television and the Internet
- Small-business incubation centers
- Rural water and sanitation systems

- Co-ops  focus on providing reliable electric service to its customers and have been successful.  Some have begun to meet other needs on the local communities, such as:

## Generation and Transmission Co-ops (G&Ts)

- To ensure reliable low-cost power, distribution co-ops joined to form G&Ts.  These generate their own power or pool their buying power to purchase it from outside.

**Notes:**
The creation of cooperatives to serve rural America does not stop at the rural electric coops.  As new needs evolve, new co-ops are formed to meet these needs.
    (Slide)

## G & Ts (Cont.)

- 60 G&Ts own part or all of 150 plants and generate 44 % of total power (33,000 MW) required by their members.
- 76 % are coal-fired plants, 13 % oil or gas, and 11 % nuclear.

- 170 MW coal plant, South Carolina

## National Rural Electric Cooperative Association (NRECA)

- Non-profit trade association formed in 1942 by the RE co-ops to address common problems facing them, such as access to financing, competitively-priced insurance programs, and lower wholesale power rates.

## NRECA (Cont.)

- Provides member RE co-ops a range of services:
- representation of interests of RE co-ops at the national government level (lobbying)
- insurance and retirement services
- funding for technical research and development
- management consulting services
- co-op manager searches
- training
- market research

## Meeting New Needs: Financing

- In 1969, co-ops formed the National Rural Utilities Cooperative Finance Corporation (“CFC”) to serve as a private bank.
- Major source of financing for co-op rehabilitation and new construction (with $20 billion in outstanding loans), complementing financing from commercial banks and the U.S. REA.

**Notes:**
Important factor in success if provision of loans by government (REA).
But some in government feel that coops have been supported long enough and do not need further government monies.  They have been voting for reduced loans.
But there is continued need for funding to expand system to serve new housing development and industries as well as to rehabilitate the system.

## Meeting New Needs: Telecommunications

- In 1986, co-ops foundedfounded the national rural telecommunications cooperative (NRTC) which ensures access byco-ops to the latest advances in telecommunications and information technology.

**Notes:**
With importance of electronic communications in commerce, rural areas again risk being left behind, just as they did with the advent of electricity.  But to avoid this . . . 
     (Slide)
As other needs arise in the future, new cooperatives are bound to be created to successfully fulfill those needs.  This ensures that people in rural areas will be able to continue keeping pace with progress.  And all this began with the vision of a few leaders, the motivation and energies of rural communities. and the rural electric cooperatives they formed together beginning a century ago.  

## The growing co-op family

- Materials and equipment procurement

**The growing co-op family**

## Slide 29

## Rural Electrification

- U.S. Rural electrification was one of the most significant events of the 20th century.
- I believe it to be the greatest non-military related event of the past 100 years.
- Since 1937, the US has developed the most comprehensive rural electric system in the world.
- Its success can easily be seen . . . .

## NRECA International Programs

- NRECA began its international rural electrification activities in 1962.
- In 1972 NRECA created NRECA Int’l Ltd.
- In 1985, NRECA established the *NRECA International Foundation* (NIF).

## NRECA Int’l Ltd 

- Long-term development programs
- Active in Rural electrification
- Establishing rural electric cooperatives
- Other electric utility related activities

- International Offices in
- Bolivia
- Guatemala
- Dominican Republic
- Bangladesh
- Philippines
- Nepal

## NRECA International Foundation Programs

- NIF Equipment and Materials Program
- Sister-to-Sister Cooperative activities
- Volunteer activities
- International guest visits to U.S. cooperatives

## Armenia Visitors With Georgia Transmission Rep.

- Armenia Visitors With Georgia Transmission Rep.

## Bangladesh Visitors With Cameron Shepard of GEMC 

- Bangladesh Visitors With Cameron Shepard of GEMC

## Gary Harbison of Illinois Rural Electric Cooperative on a Volunteer Mission to India

## Gary Provided Needed Advice on on Line Construction to Linemen in West Bengal, India 

## The Illinois Electric Cooperatives Have Been Active Participants in NIF Programs.

- Volunteers
- Illinois electric cooperative volunteers have been assisting in  hurricane restoration efforts the Dominican Republic

## The Illinois Linemen Working on the Dominican Republic Project

- Samuel Surratt,	*Illinois REC *
*{Dec. 00}*
- James Buggar,	*Cornbelt Energy*
*{James made two trips: Dec. 00 & Jan. 01}*
- Ed Dolen, 	*Illinois REC*
*{Ed made two trips: Jul. 01 & Nov. 01}*

## Samuel T. Surratt, Illinois REC Works Alongside a Dominican Republic Lineman  to Rebuild a Hurricane Damaged Power Line

## The NIF Sister Cooperative 
Program

- Program

- United States - Philippines

## Newly Constructed Substation

## Today, except for some urban centers (shaded), most of the Philippines is served by rural electric co-ops

## Sister Co-op Activities

- Exchange visits by co-op personnel
- Donate of excess materials and equipment
- Management and operational technology exchange
- Providing staff to local or national training program
- Intercultural exchange

## NRECA Helping to Transform Communities Around the World