The Cooperative Story

Every day, more than 48,000 cooperatives provide essential products and services to American consumers, touching our lives in many ways.

Tomorrow at breakfast, check your morning paper. Many of the articles may be labeled "Associated Press" or "AP." Those stories were written by individual reporters but distributed by a cooperative news organization.

If your breakfast includes orange juice, it may be a Sunkist product. Sunkist is a citrus-growers cooperative based in California.

And the list goes on: Land O'Lakes butter, Ocean Spray cranberry juice, Sun-Maid raisins, Welch's juices, Nationwide Insurance, C-SPAN, ACE Hardware, FTD, Agway - they are all cooperatives. In fact, one of every four Americans is a member of some type of cooperative, including 76 million served by credit unions.

While common, cooperatives do differ from "typical" businesses in one big way - they are organized for the benefit of their members, not single owners or stockholders. The first known cooperative in the United States was formed by Benjamin Franklin in 1752. That organization, the Philadelphia Contributorship for the Insurance of Homes from Loss of Fire, still operates today.

Most early cooperative development efforts in the United States involved farmers trying to boost their buying and selling power. According to the U.S. Department of Agriculture, the first formal farm organization - the Philadelphia Society for Promoting Agriculture - sprung up in 1785. In 1804, the initial farmer marketing cooperative was established by dairymen in the Connecticut River Valley.

Of course, not all cooperatives engaged in agricultural marketing. The first irrigation cooperative was organized in California in 1853. By 1857, Ohio and New York had adopted laws enabling the operation of cooperative (mutual) insurance companies. In 1865, Michigan passed what is believed to be the first law recognizing the cooperative business method.

The cooperative movement we know today traces its roots to a store started by weavers in the town of Rochdale (pronounced Rotch-dale) in northern England. The Rochdale model revolved around a set of guidelines drawn up by one of its members, Charles Howarth. When introduced into the United States by the National Grange in 1874, these "Rochdale Principles" fueled a cooperative explosion.

Although stated in many ways, the Rochdale Principles hold that a cooperative must provide:

  • Voluntary And Open Membership - Membership in a cooperative is available to all who can reasonably use its services, regardless of race, religion, sex or economic circumstances.
  • Democratic Member Control - Cooperatives are democratically controlled, with each member having one vote. As a result, control remains in the hands of all customers. Directors are elected from among the membership.
  • Member Economic Participation - Cooperatives provide services "at cost" and remain not-for-profit regardless of the value of benefits delivered. Any money left over after all expenses are paid - margins - belongs to the members. Each member's share in the margin is determined by the amount of his or her patronage, or use, of the cooperative's services.
  • Autonomy And Independence - Cooperatives are self-sustaining, self-help organizations controlled by their members. If cooperatives enter into agreements with others or raise money from outside sources, they do so on terms that maintain democratic control as well as their unique identity.
  • Continuing Education - Education and training for members, directors, managers and employees are prioritized so they can effectively govern the cooperative. Communication, particularly with young members and opinion leaders, helps generate necessary public support for cooperatives.
  • Cooperation Among Cooperatives - Mutual support helps cooperatives improve services, bolster local economies and deal more effectively with social and community needs.
  • Concern For Community - Cooperatives develop communities through programs supported by the membership.
History of Electric Cooperatives
As late as the mid-1930s, electricity was out of reach for 94 percent of rural residents in Pennsylvania and New Jersey. Because rural electric service generated little "profit," private power companies demanded farmers and their neighbors pay up to $3,000 per mile to build lines to their homesteads, then charged monthly rates as high as $30 - far above what city dwellers paid. This was during a time when per capita income averaged around $1,800 a year.

In many rural areas, power was not available at any cost. To get around the utilities, enterprising folks deployed "light plants" powered by steam engines, windmills or complicated battery systems to provide themselves with electricity. However, these household generators were not only bulky, noisy, expensive and costly to maintain, they produced very little electricity - just enough to "light the lights (dimly)" or run a few appliances.

The ideal solution was to get central station electric service into rural areas. Creation of the federal Rural Electrification Administration (REA) - now Rural Utilities Service - on May 11, 1935, allowed that to happen. REA financing and engineering assistance enabled farmers and their neighbors to take electrification into their own hands on a cooperative basis.

Electric Cooperatives Today
The rural electric program is "proof positive" that exciting things happen when people cooperate. Over the past seven decades, electric cooperatives have grown into a nationwide network that serves roughly 17.5 million homes, businesses, farms and other establishments, representing over 40 million people - 12 percent of the U.S. population. Cooperatives own and operate 2.5 million miles of electric lines, roughly half of the nation's total, extending across 2,500 counties in 47 states. Overall, electric cooperatives employ 67,000 men and women, and boast assets of more than $100 billion.

Pennsylvania is home to 13 electric distribution cooperatives, which provide affordable, reliable electric service to about 4 percent of the state's residents in 41 counties - covering nearly one-third of the state's land area. Serving homes, businesses, farms and seasonal residences in the "most rural of the rural" locations, cooperatives own and maintain approximately 12 percent of all electric lines in the Commonwealth. New Jersey's lone electric cooperative maintains roughly 1 percent of the Garden State's total miles of line.

Together, the 14 electric distribution cooperatives in Pennsylvania and New Jersey own Allegheny Electric Cooperative, Inc. (Allegheny), a generation and transmission cooperative headquartered in Harrisburg, Pa. Allegheny supplies wholesale power to the cooperatives from a variety of self-owned and purchased generation sources.

 

Pennsylvania Rural Electric Association
PO Box 1266 • Harrisburg, PA 17108
Phone: (717) 233-5704 • Fax: (717) 234-1309 • Email Us:
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