Greening the Old New Deal: Strengthening Rural Electric Cooperative Supports and Oversight to Combat Climate Change

Abstract

New Deal cooperatives succeeded in electrifying rural America when for-profit utilities would not. Today, however, rural electric cooperatives are lagging behind when it comes to meeting the challenge of climate change. Cooperatives have collectively been slower to embrace the shift to low-carbon electricity than for-profit and municipal utilities and have served as a drag on state and federal clean energy and climate policies. This is partially because of the structural differences between cooperatives and other utilities, but also because of a weak and under-determined federal and state regulatory structure. A few cooperatives in Colorado and New Mexico are seeking to lead the charge to a low-carbon electricity system, but they are finding themselves stymied by their own power supply cooperative. Drawing on insights from organization, public choice, and energy regulation theories, this Article argues that institutional incentives at power supply cooperatives inhibit prudent resource planning in a time of climate change. It concludes that cooperatives need significant changes to state and federal regulatory structures to counter these factors. These changes include subjecting power supply cooperatives to rigorous integrated resource planning requirements and providing state utility commissions oversight over power supply contract buy-out fees. It also includes reconsidering the wholesale electricity rate structure between power supply and distribution cooperatives.