What sets electric co-ops apart from other power providers
September 2025
Electric cooperatives deliver power to 13% of the nation’s consumers.
by Scott Flood, Contributing Columnist
Travel anywhere in the U.S., and chances are you’ll be able to find a place to plug in your phone charger. But while the power charging your phone may be identical wherever you might be, the organizations delivering it probably are not.
Throughout the U.S., electricity is delivered through three types of power providers: investor-owned utility companies (often called IOUs), public power systems and electric power cooperatives. Two-thirds of American homes and businesses receive their electricity through an IOU. Public power companies serve 15% and co-ops deliver power to 13% of the nation’s consumers.
The biggest single difference is the profit motive. Public power systems and electric co-ops are not-for-profit organizations. That means their primary motive isn’t to make a profit, but to deliver electricity to the homes and businesses they serve at the most reasonable cost. In other words, their first objective is service.
Compare that to investor-owned utilities. As the name implies, IOUs are owned by investors who collectively own the utility. Public power systems are owned by municipalities and other forms of government, which means they’re technically owned by — and accountable to — the taxpayers they serve. The people who run these government units want to keep the taxpayers happy, so their goal is to keep rates as low as possible. Similarly, co-ops are owned by the members they serve, and their primary motivation is to keep the cost of electricity as low as possible.
Once again, co-ops are different. Their operations are managed by a volunteer board of directors made up of members. Those directors represent their neighbors and have an obligation to consider other members’ concerns and preferences. A co-op member who has questions about their rates or concerns about their service can turn to their local director for answers.
Co-ops play active roles in strengthening the communities they serve.
Because co-ops are inherently focused on the needs of their members, they center their planning and operations around the places they operate. Unlike IOUs that usually offer the same services everywhere they do business, co-ops can quickly adapt to changing community needs. They also play active roles in building the economic strength of the places they serve through community support, economic development initiatives, by employing more than 73,000 Americans, and by paying $1.5 billion in state and local taxes annually.
IOUs generally have little direct competition in the areas they serve, but they compete with other public companies and IOUs for attention from investors and Wall Street, making them less eager to share ideas and innovations. In comparison, electric cooperatives work closely with neighboring co-ops and their counterparts across the U.S. That’s because they’re committed to the 7 Cooperative Principles, one of which calls for cooperation among co-ops. Whether that involves a joint investment in generation assets like solar farms, sharing resources to eliminate duplication, or being co-owners of a generation and transmission cooperative, these close relationships improve all co-ops’ ability to serve their members.
Finally, while the three types of power providers are structured and do business in different ways, it’s important to remember that all are highly regulated by multiple state and federal agencies. Unlike other industries in which companies can raise prices or build facilities whenever they want, power companies normally have to earn regulators’ permission before they can take actions that will affect the services they provide and what they charge.
Scott Flood writes for the National Rural Electric Cooperative Association.