All electric utilities receive federal subsidies in one form or another. Calculations based on federal government financial reports show that rural electric cooperatives receive the least federal amount of subsidy per consumer. This is in spite of the fact that RECs serve only 7 consumers per mile of line compared to 35 for IOUs and 47 for city-owned utilities.

Electric cooperatives are private, independent electric utilities, owned by the members they serve. Democratically governed businesses, electric cooperatives are organized under the Cooperative or Rochdale Principles, anchoring them firmly in the communities they serve and ensuring that they are closely regulated by their members.

Electric cooperatives began to spread across rural America after President Franklin D. Roosevelt created the Rural Electrification Administration (REA) in 1935. The Executive Order establishing the REA and the passage of the REA Act a year later marked the first steps in a public-private partnership that has, over the last 70 years, bridged the vast expanse of rural America to bring electric power to businesses and communities willing to organize cooperatively and accept responsibility for the provision of safe, affordable and reliable electric power.

Today more than 900 electric cooperatives power Alaskan fishing villages, dairy farms in Vermont and the suburbs and exurbs in between. They provide reliable and technologically advanced service to 40 million Americans while maintaining a unique consumer-focused approach to business.

Federal Assistance to Electric Utilities
According to Nobel Laureate economics professor, Lawrence R. Klein of the University of Pennsylvania, all types of utilities (Investor Owned Utilities (IOUs), Municipal Owned utilities and electric cooperatives enjoy some form of subsidy. You may be surprised to learn that electric cooperatives receive the least amount of subsidy per customer.

Click here to view a great youtube video that features a fast-action hand-drawn guide to the history, structure, and purpose of rural electric cooperatives. It was created by the National Rural Electric Cooperative Association.