Perspective

Why rural electric cooperatives should test the equity markets.

 

I know, I know ... asking a rural electric cooperative to consider issuing stock is like asking a leopard to change its spots. But with competition and all the turmoil in the utility industry—unbundling, retail access, regional transmission organizations, convergence mergers, global mergers—it is a question cooperative executives are starting to ask. Cooperative conversion (to continue the animal metaphor) is the elephant in the middle of the room. Everyone is aware of it—even thinking about what it means—but no one really wants to talk about it.

Lest you think I am some wild-eyed advocate of investor-owned utilities, let me give you some background about myself. I have represented rural electric cooperatives since 1985. I have worked for distribution and generation and transmission (G&T) cooperatives at both the state and federal levels. Cooperatives have been invaluable in electrifying rural America and developing an economically strong heartland. I believe in the creed that cooperatives operate for the benefit of their members. Period.

Then why do I think it is healthy to talk about cooperative conversion? There are two reasons, really. First, I am afraid of what competition from mega-utilities will do to cooperatives. Second, in this risky business, co-op members may be better off as shareholders than as owners.