How did Electric Cooperatives Start?
KREMC stands for Kosciusko Rural Electric Membership Cooperative. Electric cooperatives are a truly unique business model, as they are non-profit organizations which are member-owned. So, how did this unique business model develop and what is the history behind it? Read on to learn more.
Once Upon a Time, 95 Years Ago
In the 1930s, 9 out of 10 rural homes had no electricity. Investor-owned utilities were not willing to bring power to rural homes because it would not have been profitable for them. Living wasn’t easy for rural families, as the convenience offered by electricity found in the cities was unavailable to them.
Farmers, however, knew that electricity could make them more productive, and make life less grueling for their families as well.
So, rural folks banded together and decided to bring electricity to themselves. With the help of federal loans, they formed their own electric providers – co-ops - to generate, transmit, and deliver electricity to their homes, schools, farms, and other businesses – and do this all on a not-for-profit basis.
Roosevelt Creates REA
This was all jump started by President Franklin Roosevelt. He saw the hardship rural America was facing and vowed to do something about it. In May of 1935, he issued Executive Order 7037 which created the Rural Electrification Administration, or REA. The purpose of REA was to “to initiate, formulate, administer and supervise a program of approved projects with respect to the generation, transmission and distribution of electric energy to rural areas.”
It was the lifeblood for rural electric cooperatives which rural residents formed to bring power to the countryside. The order meant Congress could spend $1 million on rural electrification projects. It became the best investment the government ever made for rural America.
The REMC Act
Rural electric cooperatives started in Indiana with the help of the Indiana Farm Bureau Cooperative and its general manager, Harvey Hull. Hull, who learned of the effectiveness of electric co-ops during a trip to the Scandinavian countries in 1934, spearheaded the effort to bring electricity to rural Indiana.
Hull helped author the Indiana REMC Act, which was passed by the Indiana General Assembly and signed into law by Gov. Paul V. McNutt two months before Roosevelt signed Executive Order 7037.
Co-op interest flourished in the state soon after the REMC Act was passed.
Men and women from throughout the state volunteered their time and powers of persuasion to sign their neighbors up for electricity. This was a challenge, as signing up cost $5, and as it was the height of the Great Depression, people were hesitant to invest in something new and untested.
However, people signed up, and farmers volunteered long hours setting up the poles that would carry the electric lines by hand, with the help of Indiana Statewide REMC, a service organization set up by the Farm Bureau in 1935. This organization today is known as the Indiana Electric Cooperative.
Life-Changing Experience
Through the 1930s and 1940s lines were strung across rural Indiana and the nation, and soon light bulbs flickered on across the countryside. For many, the day their lights first came on was a life changing experience. It also opened the door for rural residents to purchase appliances they’d only dreamed about before such as refrigerators, toasters, radios, and washing machines.
The REA Circus
A traveling appliance show called the REA Circus invited co-op members to gather under the big top in a county fair atmosphere to learn about electric appliances, farm equipment and energy use. As many as 5,000 people a day would venture to the circus to marvel at the electric appliances.
Cooperative Core Principles
All 900 cooperatives in the nation operate under the same 7 principles. These principles are:
- Voluntary and open membership
- Democratic member control
- Members’ economic participation
- Autonomy and independence
- Education, training, and information
- Cooperation among cooperatives
- Concern for community
These principles guide our co-op forward, along with the voices of our members. Everything we do is centered on our community and members, not a sales objective.
From the beginning, the cooperative model was born from the vision and collaboration of communities, and the hard work and investment of members. That is why still today, investing in the community is at the heart of the cooperative model, and why we are led by the voices of our members.