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What is a Cooperative?

A cooperative is a business enterprise which is jointly owned and equally controlled by those who use it. It is a form of business more interested in service to people than in making dollars, though it must, of course, take in enough money to pay its way. This page features a series of questions and answers that will help you understand what a cooperative is, and how it works.

What is Wiregrass Electric Cooperative?

Wiregrass Electric Cooperative (WEC) is an electric distribution cooperative headquartered in Hartford, Ala., and with offices in Ashford, Dothan and Sam-son. The cooperative was organized in September 1939, and its first substation was energized in June 1940. Today, WEC has more than 16,000 member-owners, and serves more than 23,000 meters and 3,600 miles of line.

How does WEC operate?

The CEO makes the day-to-day business decisions for the cooperative. The members elect a Board of Trustees at the annual meeting each year. The nine trustees are the policy making and supervisory branch of the cooperative. They make sure the cooperative is run correctly and in the best interest of the members. Current members of the Board of Trustees are: Kip Justice (president), Danny McNeil (vice-president), Debra E. Baxley (secretary), Greg McCullough, Donna Parrish, John Clark Jr., Tracy Reeder, Nolan Laird and Donald Ray Wilks.

How is a cooperative nonprofit?

After all expenses are paid at the end of the year, any excess revenue (margins) is assigned on the cooperative books to the patrons who used the services on a prorated basis. The cooperative retains these funds, called capital credits, to use as operating funds. As the funds increase to the point that the cooperative has more than the amount needed for operation, a portion of the capital credits are refunded to the members on a first-in, first-out basis.

Do cooperatives pay taxes?

Yes, rural electric cooperatives pay taxes on the same basis as other businesses. The only tax cooperatives do not pay is income tax. There is no profit, so there is no income tax to pay.

What are the Seven Cooperative Principles?

All cooperatives operate according to a set of seven principles. Cooperatives trace the roots of these principles to the first modern cooperative founded in Rochdale, England in 1844.

Principle #1: Voluntary and Open Membership
Cooperatives are voluntary organizations, open to all people able to use its services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.

Principle #2: Democratic Member Control
Cooperatives are democratic organizations controlled by their members—those who buy the goods or use the services of the cooperative—who actively participate in setting policies and making decisions.

Principle #3: Member’s Economic Participation
Members contribute equally to, and democratically control, the capital of the cooperative. This benefits members in proportion to the business they conduct with the cooperative rather than on the capital invested.

Principle #4: Autonomy and Independence
Cooperatives are autonomous, self-help organizations controlled by their members. If the co-op enters into agreements with other organizations or raises capital from external sources, it is done so based on terms that ensure democratic control by the members and maintains the cooperative’s autonomy.

Principle #5: Education, Training, and Information
Cooperatives provide education and training for members, elected representatives, managers and employees so they can contribute effectively to the development of their cooperative. Members also inform the general public about the nature and benefits of cooperatives.

Principle #6: Cooperation Among Cooperatives
Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.

Principle #7: Concern for Community
While focusing on member needs, cooperatives work for the sustainable development of communities through policies and programs accepted by the members.

What is AREA?

The Alabama Rural Electric Association (AREA) is an association formed by the trustees of nearly all electric cooperatives in Alabama so they can discuss common problems, share the benefits of their experience and work together to protect cooperatives from outside groups who may not have the member-owners’ best interest in mind. AREA assists with the publication of Alabama Living magazine, which is sent to cooperative member-owners across the state. It also conducts meetings and workshops for cooperative trustees and employees, works closely with the state legislature and other agencies on matters that affect electric cooperatives, and coordinates the Youth Tour program.

A brief history of the REA

The Rural Electrification Administration (REA), a former agency of the U.S. Department of Agriculture, administered loan programs for electrification and telephone service in rural areas. The REA was created in 1935 by executive order as an independent federal bureau, authorized by Congress in 1936, and later reorganized as a division of the U.S. Department of Agriculture. The REA undertook the task to provide farms with affordable electric lighting and power. To implement those goals, the administration made long-term, low-interest loans to state and local governments, to farmers’ cooperatives and to nonprofit organizations. No loans were made directly to consumers. In 1949, the REA was authorized to make loans for telephone improvements, and in 1988, REA was permitted to give interest-free loans for job creation and rural electric systems. By the early 1970s, about 98 per-cent of all farms in the United States had electric service, a demonstration of REA’s success. When REA was created, only about 10 percent of all farms had electricity. The administration was abolished in 1994 and its functions assumed by the Rural Utilities Service (RUS).

What is NRECA?

NRECA is a service organization representing more than 1,000 rural electric systems in 46 states. Through NRECA, member systems provide themselves services which would be unavailable or too expensive if each system, individually, attempted to provide these services by itself. By working together through NRECA, member systems are able to provide better services to their members at the lowest possible cost. NRECA is not supported by government funds nor is it an agency of the Federal government.