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The Truth about EMCs. . .
Before the ink dried on the 1936 Act creating the EMCs, our critics were out in force. They called us a “threat to
free enterprise” and “quasi-government agencies,” among other things. Regrettably, most of the criticism came from
investor-owned utilities that had been unwilling to string electric wire to rural areas in the first place. Apparently, they
saw no profit in serving rural areas.
Through careful management and attention to the needs of our customer-owners, EMCs have proven those early critics
wrong. But that hasn’t stopped them from complaining about us. Nearly every criticism they make today, they have
made since we started supplying electricity. Let’s consider a few and set the record straight.
They say: “Co-ops are quasi-governmental agencies.”
FALSE! Anyone who makes that statement does not have a
basic understanding of the cooperative form of business. Our
members are our owners. They alone decide what products we
offer and what prices we charge. Being subject to the democratic
control of our members does not make us “quasi-governmental,” it
makes us a cooperative.
EMCs are self-reliant, pro-consumer businesses that represent
a successful way of doing business that people trust. Over 100
million Americans are members of various cooperatives, and even
more are consumers of co-op products every day. Dunkin’
Donuts, Ace Hardware and the Associated Press are just three
examples. Cooperatives have proven to be a successful form of
free enterprise since the days of Benjamin Franklin.
Throughout our history we survived by adapting and
innovating to meet the needs of our customers–our owners. Our
founders could never have imagined many of the new
services we are now offering, but they would surely approve of
them as the natural evolution of our business.
They say: “Co-ops have an unfair advantage with their tax-exempt
status.”
FALSE AGAIN! Competitors have attempted to use that one
against us from our inception. Every year, our Georgia EMCs pay
over $70 million in taxes. Yes, EMCs are exempt from paying federal
income taxes, but the same advantage is available to any
electric or gas utility that chooses to operate under cooperative
principles–that is, operating on a cost basis and returning revenues
that exceed cost to their members rather than themselves
or their shareholders.
While we are setting the record straight, let’s be clear about
one more thing: All electric utilities receive federal assistance in one
form or another, as confirmed in a recent report from the
Congressional Research Service. Calculations based on federal
government financial reports show that electric cooperatives
receive the least amount of federal assistance per customer–just
$10 per customer as compared to $44 for the investor-owned
utilities and $69 for city-owned utilities.
It is particularly disappointing to hear this charge repeated
today when many EMCs no longer borrow funds from the
government. Many EMCs are borrowing their capital for investment
in new plants and services from the private sector at market
rates. Even Rural Utilities Service (RUS) borrowers pay
interest at rates similar to those paid on municipal bonds.
They say: “Co-ops often set up sham corporations using government
funds to compete with the private sector for services unrelated to
electricity.”
ABSOLUTELY FALSE! This allegation is a blatant attempt to
keep EMCs from setting up legally separate businesses to meet
customer demand for services other than electricity. In a true
cooperative, the member-owners decide–through an elected
board–which services to provide and prices to charge.
Many EMC members are asking us to deliver a variety of
new services, including telecommunications and home security.
In each case, EMCs take special steps to ensure that funds
received from providing electricity are NOT used for the operation
of the separate entity. Frankly, we would never use federally
subsidized loans from the Rural Utilities Service (RUS) to enter
one of these separate business endeavors. We can’t. Federal law
won’t allow it. The RUS provides strict oversight of loans under
its jurisdiction and would not hesitate to impose a stiff penalty
on any EMC that violated the law.
Next month: Part II of “What Every Georgian Ought
to Know About EMCs.”
Middle Georgia EMC
P.O. Box 190, Vienna, GA 31092
912.268.2671
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