Under the successful and proven cooperative business model, Minnesota’s electric cooperatives are locally owned and rate-regulated by the consumer-owners they serve and governed by an elected board of directors who are also consumer-owners of the organization. In a cooperative, the member-owners have equal voting rights (one member, one vote) and a vital and valued voice.
Electric Cooperatives operate at a close-to-cost, which provides competitive energy costs for rural and suburban Minnesota businesses and consumers.
Minnesota’s electric cooperatives
Minnesota’s electric cooperatives are independent of each other but work together to provide power in rural areas covering 1/3 of the state.
- Are home to 44 distribution cooperatives, which are served by six generation and transmission cooperatives
- Employ about 2,974 people
- Serve 855,002 meters or about 1.7 million of Minnesota’s 5.1 million residents
- The median-sized co-op is 8,296 members and range in size between 1,878 to more than 132,289
- Supply over 16,683,413 MWh per year, which is about 22.9 % of Minnesota’s electricity
- Operate the largest distribution network in the state, with more than 135,258 miles of electric lines
- Average 6.6 consumers per mile of distribution line. According to current national statistics, all other utilities (including investor-owned and municipal services) average 32 customers per mile of distribution line.
Seven cooperative principles
Most cooperatives strive to adhere to seven cooperative principles, which combine to help build trust between the co-op, its members and the community. Download 7 Cooperative Principles.
Cooperatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.
Cooperatives are democratic organizations controlled by their members, who actively participate in setting policies and making decisions. The elected representatives are accountable to the membership. In primary cooperatives, members have equal voting rights (one member, one vote) and cooperatives at other levels are organized in a democratic manner.
Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing the cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership.
Cooperatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy.
Cooperatives provide education and training for their members, elected representatives, managers and employees so they can contribute effectively to the development of their cooperatives. They inform the general public, particularly young people and opinion leaders, about the nature and benefits of cooperation.
Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.
While focusing on member needs, cooperatives work for the sustainable development of their communities through policies accepted by their members.
Capital credits: one of the many benefits of being a cooperative member
As cost-based utilities, electric co-ops don’t earn a profit; they use the term margin for the remaining revenue after all debts have been paid. Capital credits reflect each member’s equity in and contribution of capital to the cooperative. Margins differ from dividends that investor-owned utilities pay shareholders, who may or may not receive service from the utility. An average of $26 million per year is returned to consumer-owners by the state’s electric cooperatives.
Co-ops have two primary sources of capital to finance long-term investment in electric utility infrastructure: debt and equity. Debt is money borrowed from outside sources. Equity is money invested by co-op member-owners. Equity investments made by members of the cooperative are called capital credits.
Cooperatives are allowed by law to use capital credit allocation funds for:
- Payment of the principal portion of the co-op’s long-term debt, as required by its mortgage agreements
- Adding new power lines in developing areas
- Upgrading outdated infrastructure
Capital credits may be refunded to the member at a future date if the cooperative’s financial position is adequate to return a portion of the equity to member-owners, a decision made by the co-op’s board.
Concern for community
Minnesota electric cooperatives are an integral part of the communities they serve. With more than 80 years of experience in providing affordable and reliable service, cooperatives are a ready-made delivery system for improving the economic health of their rural and suburban communities, where their board and staff live and work.
The economic development efforts of Minnesota electric cooperatives are an extension of the federal rural electrification program’s original goal to provide a quality of life for all citizens no matter where they live. Minnesota electric cooperatives typically are near the top of the 50 states in the use of rural economic development loans and grants issued by the USDA.
Cooperatives aggressively work to attract and help expand existing businesses. They often undertake projects that improve infrastructure like broadband and improved quality of life. They are a community’s cornerstone of economic development and spur job creation by guaranteeing zero-interest loans secured through the USDA Rural Development Service.
Many of Minnesota’s electric cooperatives participate in volunteer and scholarship programs, including Operation Round Up®, GreenTouch and many more.
The Operation Round Up® program brings together a fund from members who agree to round up their electric bills to the next dollar, usually not more than 50 cents per month, or an average of $6.00 per year per customer bill. In the first ten years, members gave more than $4.8 million to local charities through Operation Round Up®. The GreenTouch project is a partnership between Minnesota’s Touchstone Energy cooperatives and the Minnesota state park system. The state’s electric co-ops have donated over $320,000 to the Minnesota Department of Natural Resources to help fund the state park guide and Junior Park Naturalist program.