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The Profit In Co-ops

I’ve always been puzzled by something electric co-op members say in surveys and focus groups: that in some ways they have more confidence in for-profit, investor-owned utilities than they do in local, customer-owned, not-for-profit electric cooperatives.

In this audience research, people say they like the local, neighborly nature of electric co-ops, but when it comes to technological innovation and efficient business operations, they think city-based investor-owned utilities do a better job.

I’m biased in this matter. Co-ops pay my salary, I’ve worked for them for 20 years, and I do all my banking at a credit union—which is a cooperative. At the grocery I only reach for Land O’ Lakes butter because it’s supplied by a cooperative. So I can only imagine why people would think any organization is better than a co-op.

As my tribute to October being Co-op Month I’ll list a couple of the reasons I think people are more impressed with profit-making businesses and, with all due respect, how I see things differently.

People believe the profit motive produces performance. Money is a huge motivator, but not the only one. I’ve seen bright, creative people regularly work late into the night at both profit-making and nonprofit businesses. And while the drive for profits creates great things, there are drawbacks for the customer: the cost of doing business includes sending dividends to shareholders, and the focus on investors can mean attention to customers is a byproduct rather than a priority. At a co-op, however, price and service for the customer is the only reason for its existence.

Nonprofits have a bad image. Even in my mind, the term “nonprofit” creates an image of a couple of raggedy people in a shabby office. But electric co-ops use a lot of the same technology you’ll find at utilities in Louisville and New York. True, they’re small, so they partner with other co-ops—the 26 electric co-ops in Kentucky and the more than 900 around the nation. Co-ops are plugged into the most sophisticated research and development programs in the nation.

If proof lies in performance, California’s energy disaster of the past couple of years offers an example of superior performance by electric co-ops. Customers of the three large investor-owned utilities in California suffered power outages and rate shocks, not the members of the two relatively small electric co-ops in the state.

None of this is to criticize profit-making ventures, but to celebrate the abilities and performance of electric cooperatives.

Happy Co-op Month.

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