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The business of electric co-ops

A great idea still paying off for Kentucky

THIS SPACE TYPICALLY SHOWCASES one of the thousands of businesses served by electric cooperatives in Kentucky. But the co-ops themselves and their power providers are also businesses, each with a unique mission and footprint in Kentucky. In the spirit of this commemorative edition, here is a brief overview:

By the 1930s, most cities had electricity. The city of Henderson saw its first electric lights in summer 1886. Electric utilities were a $12 billion industry in the United States, but almost exclusively within the boundaries of cities and towns. Utility executives thought extending electric lines into sparsely settled areas would be cost prohibitive. As a result, by 1932, only 10% of Kentuckians received electricity from a central source. Only 3% of Kentucky farms had electricity.

In 1933, Congress authorized the Tennessee Valley Authority to construct transmission lines to serve “farms and small villages that are not otherwise supplied with electricity at reasonable rates.”

As part of President Franklin D. Roosevelt’s New Deal, on May 20, 1936, Congress passed the Rural Electrification Act, allowing the federal government to make low-cost loans to local interests. Ten days later, farmers in Henderson County incorporated the first electric cooperative in Kentucky.

Rural Electrification Administration officials soon realized that established investor-owned utilities were not interested in using federal loan funds to serve rural areas. But loan applications from farmer-based cooperatives poured in, and REA soon realized not-for-profit co-ops owned by the people they serve would be the ones to make rural electrification a reality. 

Between May 1936 and April 1938, 24 local distribution cooperatives organized across Kentucky. Three more incorporated in 1940 and one additional co-op in far eastern Kentucky completed the loop in 1951.

The first few decades of rural electrification were not universally applauded, however. For-profit electric companies protested the cooperative business model and sought to control who was allowed to generate and transmit electricity. 

Cooperatives banded together to form the statewide co-op association in 1943. When operations began in 1948, the co-ops communicated with members in a monthly publication that is now Kentucky Living. 

The association advocated for co-ops, including East Kentucky Power Cooperative. Now owned by 16 member cooperatives, EKPC began active functioning in 1950 and opened its first power plant to serve those member-owners in 1954, followed by another in 1963. Meanwhile, Big Rivers Electric Corporation was formed in western Kentucky in 1962 and began supplying power to its member-owner cooperatives four years later.

Five of Kentucky’s 24 local electric distribution cooperatives purchase their power from TVA, which serves all or a portion of 28 counties in south-central and western Kentucky.

Today, electric cooperatives continue to serve, not only in rural areas but in all kinds of Kentucky communities where the co-ops play a key role in economic development. Nearly 90 years after the REA paved the way for the existence of electric co-ops, the cooperative form of business continues to be a success story for Kentucky and the nation.

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