Rural Spotlight

Rural Electric Cooperatives Could Transition to Clean Energy with Federal Investments

To maintain their commitment to providing affordable and stable electricity to rural areas, many rural electric cooperatives are interested in switching from more expensive coal-fired power plants to cleaner, cheaper electricity sources like wind and solar. Unfortunately, these member-owned utilities are also tied to old debts, much of it from government loans, that keep them from moving on from the more expensive fossil fuel energy of the past.

Rural Electric Cooperatives (RECs) are member-owned utilities, created during the New Deal era as private-sector electric companies failed to build out the power grid to rural places. Backed by government funding, RECs were founded and brought electricity to millions of farms and small towns throughout the mission. Government funding was needed to build the infrastructure, and also supported the mission of providing low-cost energy to the members who own the REC network.

Today, RECs provide electricity for 20 million businesses, homes, schools and farms in 48 states, according to National Rural Electric Cooperative Association. RECs also own and maintain 42% of U.S. electric transmission lines. The REC network is made up of 831 distribution cooperatives and 62 generation-and-transmission cooperatives that provide wholesale power to distribution co-ops through their own electric generation facilities or by purchasing power on behalf of the distribution members.

Unfortunately, many RECs are locked into long-term supply contracts and debts tied to generations of coal dependence. Around 67% of the REC electric supply is powered by coal, which is both more expensive to operate and generates much more pollution.

In order to continue affordable electricity availability for REC members, as well as decrease coal pollution that is a major cause of climate change, many rural organizations are calling for policy changes that will assist the REC transition from coal dependence to a clean energy future. Rural Policy Summit participants such as CURE (Clean Up the River Environment), WORC (Western Organization of Resource Councils) and Partnership for Southern Equity are calling on Congress to provide resources to:

  • Pass $100 billion in appropriations for federally insured Hardship Loans from the USDA Rural Utilities Service to retire underperforming rural electric cooperative coal facilities. These appropriations would facilitate the retirement of a huge majority of rural electric cooperative coal electricity plants currently in operation. In exchange for debt forgiveness, rural electric cooperatives will make equal investment in clean energy, distributed energy resources, energy efficiency, high speed broadband, storage, and electric transportation.

As pointed out in CURE’s Report, “Rural Electrification 2.0: The Transition to a Clean Energy Economy,” retiring coal debt and incentivizing clean energy for RECs would be one of the best methods to reducing U.S. climate pollution while creating rural jobs in the solar and wind industry.