Scorecard Methodology

Electric cooperatives in seven Southeastern states were scored and ranked using a variety of metrics related to how they are governed and the services they provide to their members. The data was collected by staff and interns from seven organizations working in these states by reviewing the cooperatives’ websites, bylaws and IRS 990 forms, as well as through direct conversations with co-op staff. The purpose of this evaluation is to ensure that electric co-ops are providing their members with a range of opportunities available to rural communities in the 21st century.

Overall scores for co-ops were derived by adding their scores in the Governance and Member Services categories, each of which has a maximum of 50 possible points. Thus the total maximum score a co-op could receive is 100 points. The criteria used to derive the Governance and Member Services scores and the methodology used to evaluate them are detailed below.

Governance

Electric cooperatives are owned by the members they serve — but how much control do member-owners actually have over decisions made by their co-op?

The most important way for member-owners to be democratically involved is to vote for their representatives on the co-op’s board of directors. But at many electric cooperatives, incumbent board candidates face no challengers during elections and maintain their seats for years or even decades. In some cases, the board member may have even obtained their position from a parent or spouse. Winning these board seats is often very difficult for new candidates where board incumbents use deep community ties and financial resources to hold on to their positions of power.

Of course, there are other ways that member-owners could be involved in the governance of their cooperative, but they often run into barriers such as having no ability to change their co-op bylaws, attend and speak at monthly board meetings or even communicate with board members, see minutes of board meetings, or gain access to key financial information.

Below is a detailed list of the criteria we used to determine how electric cooperatives in our region rank in terms of their governance practices and financial transparency.

It is important to note that for questions that require a review of the co-op bylaws, if the bylaws were not available online, provided to the researcher upon request, or if the co-op failed or refused to respond to information requests, the co-op received a score of 0 for that question. As multiple questions pertaining to governance rely on access to the co-op bylaws, the lack of such access for any co-op had a significant negative impact on that co-op’s governance and therefore overall score. Additionally, all governance questions were answered with either a “Yes,” which received the full allocated points for that question, or “No,” which resulted in 0 points.

Member Services

Electric cooperatives are an important resource for rural areas. They provide jobs, recruit new businesses and invest large amounts of money into energy infrastructure, co-op programs and local charities. Electric co-ops also have access to billions of federal and state dollars to fund programs for their members that could greatly improve their quality of life.

Co-op programs like Pay-As-You-Save (PAYS) allow all members the opportunity to improve the energy efficiency their homes and then pay the costs back to the co-op over time on their monthly electric bill, with the savings exceeding the monthly payments, resulting in a net reduction of the members’ bill. Community solar programs at co-ops can allow rural households to access clean, renewable energy without requiring members to shoulder the upfront costs or meet structural install requirements, and can reduce energy bills and energy waste. These types of programs are a huge need for member-owners across our region, where the percentage of income spent on energy bills, known as energy burden, is higher in rural areas and for low-income households.

One barrier to implementing energy efficiency or solar at electric co-ops is known as a “fixed fee” or “basic utilities charge.” Because the charge is not based on the amount of electricity used by the member, it reduces the incentive to save electricity or invest in solar. In some cases the fixed fee is not visible on a member’s electricity bill, so they don’t know how much of their bill is tied up in the fixed fee or when the fee has been raised.

In rural areas across the Southeast, lack of sufficient internet access is also a huge problem. Most electric cooperatives have the legal authority and financial incentives for implementing broadband internet programs for their members.

Another issue of concern for member-owners is the spraying of herbicide along electricity line “right of ways” across members’ property, especially without notice. In 2016 and 2017, member-owners of Powell Valley Electric Cooperative in East Tennessee lost their gardens and beehives and some encountered negative health impacts when the right-of-ways on their property were sprayed without notice. Following this incident, member-owners at PVEC and a neighboring utility worked together to develop an opt-out and notification policy at their cooperatives. Providing these types of policies is a clear way to keep members safe and protect their livelihoods.

And finally, the COVID pandemic highlighted the vulnerability of low-income, elderly and otherwise vulnerable households to facing loss of utility services due to non-payment. While this is a concern for any household that experiences energy affordability challenges on a monthly basis, there is a distinct need to provide members and households that have a medical necessity to maintain power and heat, whether due to the existence of life-supporting medical equipment in the home or the health risk to medically vulnerable people should their utility services be shut off. At a minimum, co-ops should provide such households with significant leeway if they are unable to afford a monthly bill and delay service disconnection.
Energy Efficiency Financing (10 points possible)

Energy Burden, Poverty and Racial Demographics

Average Household Income and Household Energy Burden

Household energy burden is defined as the percent of gross household income spent on home energy costs, including electricity and non-electric heating fuels such as gas, kerosene or wood. The nationally accepted standard for what constitutes an affordable energy burden is 6%, although low-income households may experience challenges affording their energy bills at an even lower percentage.

As a complement to the Southeast Electric Co-op Scorecard we calculated household energy burdens for all income levels and for low-income households for communities served by every electric utility in the seven-state Southeast region included in the project, and aggregated the data to the state level to be able to compare energy burdens between electric cooperatives and all types of utilities including for-profit investor-owned utilities, municipally-owned utilities and other publicly-owned utilities.

The intent of the analysis is to highlight the extent to which low-income households may be experiencing significant challenges affording their energy bills. In the context of the co-op scorecard, given that co-ops serve communities with extremely high low-income energy burdens, have access to significant financial resources for investing in solutions to lower their energy bills, and have a closer relationship to their members than any other entity, they are best positioned to address the problem of energy burdens through investments in energy efficiency and renewable energy resources to help lower their members’ bills. However, as our scorecard shows, co-op across the Southeast are doing little to provide those services.

Low-Income Energy Affordability Data (LEAD) tool, which provides detailed income and energy cost data at the household level for virtually every Census Tract in the United States. Using GIS software, we then used utility service area shapefiles purchased from S&P Global Commodity Insights (formerly Platts) to attach a utility name and company number to every tract. Since utility service area boundaries often cross through and do not follow the boundaries of Census Tracts we allocated tracts to individual electric utilities based on where the GIS-determined centroid of each tract was located. This approach inherently results in some margin of error but serves as the best available method. Once each tract and its associated income and energy cost data was coded with a utility name, we aggregated the data to the utility level and performed basic calculations to determine the average household income, average total energy cost, and using those two data points, average household energy burden for all households served by every electric utility. A simple filter for households falling under 200% of the federal poverty level was used to generate the same calculations for low-income households.

Poverty and Racial Demographics

To generate an average percent of the population served by each electric utility that falls under the federal poverty level we used tract-level data from the US Census Bureau’s American Community Survey (ACS), table S1701: Poverty Status in the Past 12 Months for 2019 (5-year estimates). For the calculation of “percent people of color/under-represented population,” we used ACS tract-level data from table DP05: Demographic and Housing Estimates for 2020 (5-year estimates), using the breakdown of racial categories provided under the RACE heading. We then performed the same GIS tagging of tracts with utility names as described for our energy burden analysis, aggregated the poverty and race data to the utility level, and performed basic calculations to determine the respective percentages.