Editorial: March 2018
Public policy fairness suits our cooperatives
Every so often, we need to reaffirm who we are as electric cooperatives, how we operate, and the intent behind public policy meant to protect electric consumers. Over the years, our cooperatives have encountered public commentary claiming we have unfair marketplace advantages. These times are no different, so permit me to provide some clarification, and perhaps some education.
One criticism concerns electric cooperatives’ access to low-interest loans through the federal government. While our co-ops do use this resource, it must be understood along with the rest of the story about how electrification of rural areas happens. Cooperatives do borrow and repay loans from the federal Rural Utilities Service (RUS). This facilitates the buildout of thousands of miles of line needed to energize rural homes and farms nationwide.
The investment of cooperatives in affordable, reliable service for their members continues to be made. Financing for these investments continues to come from RUS - and from private sector lenders. In North Dakota, electric cooperatives have relied on these lenders to be able to invest billions of dollars in electric system extensions for cooperative members, over the last 20 years.
We hear the concern that, as self-regulated utilities - operating on a nonprofit, cost-of-service basis - electric cooperatives do not come under the rate-making jurisdiction of the Public Service Commission. Cooperative member-owners elect representatives to govern, set rates and be stewards of resources. Any revenue above expenses that the cooperative takes in is returned to local member-owners over time in the form of capital credit patronage.
Then there is the claim that electric cooperatives pick up much of the electric service growth in the state because they are favored by the state’s Territorial Integrity Act (TIA). TIA is the legislative framework for determining the respective areas served by cooperatives and investor-owned utilities. Collectively, North Dakota’s electric cooperatives own and maintain more than 61,000 miles of distribution lines and provide power to far less than half of the state’s population. Serving a smaller population over a larger land area is hardly an advantage.
The related assertion that North Dakota’s TIA favors cooperatives and discourages investor-owned utilities from making system investments is not supported by how the law has worked. North Dakota’s TIA serves the best interests of both rural and urban consumers and electric power suppliers by ensuring orderly development of costly electrical infrastructure in order to prevent wasteful, costly duplication. Also, more often than not, cooperatives and investor-owned utilities work together on a local level to establish service agreements to avoid such duplication.
A prosperous economy requires affordable and reliable electricity. North Dakota’s electric cooperatives are extraordinarily proud of our roots in the electrification of North Dakota, and we will continue to support policies that ensure a bright future for all electric consumers.
Josh Kramer, editor-in-chief of North Dakota Living, is executive vice president and general manager of the North Dakota Association of Rural Electric Cooperatives, Mandan. Comments can be mailed to Josh Kramer, NDAREC, P.O. Box 727, Mandan, ND 58554-0727 or by email email@example.com