Nonprofit Cooperatives Serve Thousands Across State

by Luke Jones  on Monday, Apr. 2, 2012 12:00 am  

Each year, hundreds of thousands of Arkansans use cooperatives, nonprofits with unique models allowing customers to join the companies as members.

There are several types of cooperatives: utility co-ops, credit unions, farm co-ops, housing co-ops and food co-ops, among others.

(Click here for a sidebar on credit unions, and here for a sidebar on the state's only food co-op.)

Of these, utility cooperatives are the largest, with 500,000 members across the state. Arkansas Electric Cooperatives Inc. was formed in 1942 to provide a legislative voice for the state's 17 local electric cooperatives. Another part of the organization, Arkansas Electric Cooperative Corp., supplies wholesale power to utility co-ops in the state.

"We're not for profit; we have no shareholders," said Doug White, vice president and corporate spokesman for AECI. "Our members are equity owners of the cooperative, and any money garnered above and beyond the margins are returned to them in the form of capital credits, essentially a dividend."

The dividend is different for every co-op. First Electric Cooperative of Jacksonville, for example, paid out $3.8 million in capital credits in 2011. Sometimes the payout is a simple check; other times it can be used as credit toward future electric bills.

The utility co-op model started shortly after electricity became prevalent in urban areas. It began in Arkansas with First Electric, established in 1937 under Franklin D. Roosevelt's Rural Electrification Act. The idea was to spread power outward into more remote areas, something that the existing power corporations had little desire to do.

"Cooperatives formed to serve those who would have otherwise not had electricity," said Rob Roedel, communications manager for AECI.

In 1938, First Electric had 150 members in the Jacksonville area. According to Tonya Everhart, First Electric's vice president of marketing and communication, it now has 88,000 throughout Jacksonville, Heber Springs, Benton, Perryville and Stuttgart. Early on, membership spread by word of mouth.

"As a member, you would try to get your neighbor to sign up, and that way you could continue that line of power," Everhart said.

Landwise, about 34 percent of the state is served by electric co-ops, with about 60 percent served by Entergy Arkansas and the rest by utilities with small pieces of the state.

Generally, most co-op districts started in rural areas. That's changed over the years, however.



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