Anyone in his golden years who was raised in rural America just might remember life without kilowatt-hours. Rural electric consumers can thank President Franklin D. Roosevelt for signing into law the Rural Electrification Act in 1935. The Act, part of the New Deal, established the Rural Electrification Administration (REA) to make funds available for consumer groups to establish cooperative electric utilities. The ‘for profit’ electric utilities had determined the metropolitan boundaries they wished to serve. Those private utilities decided against extending their lines into the rural areas unless the consumer paid for the entire extension. Profit-minded utilities considered the low population density and apparent limited potential consumption a poor investment, and concluded that it was cost-prohibitive for investor-owned utilities to serve the rural areas.
Tired of not having central station electric power available, rural residents began, with the help of the REA, forming regional rural electric cooperatives all across the nation. Umatilla Electric Cooperative (UEC) was incorporated June 18, 1937, to meet the growing need for rural electricity in this area. Members were solicited and a Board of Directors was elected. The goal: to provide electric service to the rural areas within UEC’s designated franchise area at the lowest possible cost.
UEC applied for a $129,000 loan from REA to cover costs of engineering and construction of the initial phase of the UEC system. Interest rates for all power equipment were a mere two percent until 1973, when the Rural Electrification Administration increased the rate to five percent. Today, UEC typically borrows money from the Rural Utility Service (RUS), at market rates. The REA was renamed to RUS in order to offer a broader range of financial services.
After 1935, electric power that had previously been available only in densely populated areas became available in the less-populous regions. Many of those rural areas have since become sprawling urban vicinities. Today, one-quarter of all Americans are served by more than 1,000 rural electric consumer-owned organizations. Electric cooperatives serve more than 12 million farms, homes, schools, churches, irrigation systems, commercial enterprises, and other establishments in 2,600 of the 3,128 counties or rural areas of the United States, as well as Puerto Rico and American Samoa.
America’s rural electric cooperatives serve more than 25 million people. The cooperatives own and maintain more than two million miles (44 percent) of the power lines in the United States. Rural electric cooperatives average only 5 to 6 consumers per mile of line. In contrast, publicly or municipally-owned utilities average 45 to 50 consumers per mile of line.
UEC was and is a local, consumer-owned electric cooperative, operated solely to serve its members. It is a nonprofit corporation owned by the members it serves. Its seven directors live throughout the service area of UEC, and are elected by about 8,697 UEC members. (UEC serves more than 14,497 meters.) Directors establish policies through which electric service is provided, meeting monthly to review the business affairs of the corporation.
Anyone who lives or has a business within the service area of UEC is eligible to become a member of the cooperative upon applying for electric service. Because the cooperative is democratic, every member has one vote. People control and direct UEC, not money nor politics. A cooperative’s revenues over and above operating expenses and debt service are credited to consumer-owners’ accounts, and are periodically returned to consumers as patronage funds, called capital credits. Although the emerging corporation operated without profit margins during its early years of service, capital credits have been assigned annually since 1941, and the first payments were issued to UEC members in 1960. These periodic refunds are allotted to members in proportion to their billings. Most recently, a total of $1.68 million was returned to UEC members, $1.45 million in capital credit refunds from 1987 margins, and $237,000 from 2003 margins.
During UEC’s early years, Pacific Power and Light Company supplied wholesale power. But in 1942, an agreement was reached with the relatively new Bonneville Power Administration, resulting in lower power rates. The construction of the Umatilla Army Depot during World War II, and later, McNary Dam, brought a surge of new people into the area. As these people moved into the UEC service area, existing power lines began to have more customers, and rates decreased.
Over the years, UEC power rates have always been competitive. UEC enjoyed the benefits of surplus hydroelectric power until 1975 when higher interest rates and double-digit inflation caused UEC’s first rate increases. During the early 1980’s, the costs of nuclear and coal generating plants were added to BPA and UEC rate bases. For almost 70 years, rural electrification has been a bargain for UEC members.
Every rural electric customer receives a complimentary subscription to the Ruralite. This rural electric publication features articles of regional and local interest in every issue. Copies of the Ruralite are mailed to UEC customers every month.
The National Rural Electric Cooperative Association, formed in 1942, represents the national interests of electric cooperatives. NRECA provides legislative and regulatory services and programs in management training, insurance, public relations, and advertising – all designed to help electric cooperatives serve their consumer-owners effectively and efficiently.