October 2015 Back Page — There is a Cooperative Difference.

Posted: October 22, 2015

While all electric utilities offer the same product, where it comes from makes a difference.

By Adam Schwartz. 

In the U.S., most people receive their electricity from one of three types of utilities: investor-owned, municipal-owned or through their electric cooperative, which is owned and controlled by the people who use it.

In the investor-owned model, the corporation is owned by stockholders who may not be customers of the utility. IOUs tend to be large corporations, such as Entergy or Con Edison. IOUs typically serve large cities, suburban areas and some rural areas. Bethel Utilities used to be a privately owned utility before the community became a member of AVEC.

In most cases, IOUs have few employees in the communities where they operate. This, combined with the fact they have outside investors whose sole motive is to make a profit on their investment, generally tends to lead to less personalized service. Consumer surveys confirm IOUs have the lowest customer satisfaction ratings. About 72 percent of the U.S. population is served by investor-owned utilities.

Municipal electric systems are government owned. They serve large cities, such as Seattle, or smaller areas, such as Anchorage. In municipal systems, the city runs the utility with little to no meaningful oversight from the citizens. About 16 percent of the U.S. market is served by municipal utilities.

Rural electric cooperatives serve the smallest number of consumers—about 12 percent of the market—which equals 42 million people. There are more than 900 electric co-ops in 47 states. While co-ops serve the fewest number of people, their electric lines cover more than 75 percent of the U.S. landmass. This is because co-ops provide power where others once refused to go because of the low population density. Electric co-ops rank highest in member satisfaction among the three types of utilities. This is because co-ops serve member-owners, not customers.

As the electric utility business continues to evolve, AVEC is committed to being there for you, the member, to provide for your electric energy needs. Unlike large IOUs, AVEC is rooted here in the 56 communities it serves spread throughout Alaska. Through the years, AVEC has given back to members by returning capital credits and donating to community events.

There is a cooperative difference. You own your co-op, and it is here to serve you.

Adam Schwartz is the founder of The Cooperative Way, a consulting firm that helps co-ops succeed. He is an author, speaker and member-owner of the CDS Consulting Co-op.