Cooperative Clean Energy

88 Pages Posted: 5 Dec 2020 Last revised: 13 Jan 2022

See all articles by Alexandra B. Klass

Alexandra B. Klass

University of Michigan Law School

Gabriel Chan

University of Minnesota - Minneapolis - Humphrey School of Public Affairs

Date Written: November 21, 2020

Abstract

The last decade has seen significant attention and debate among academics, policymakers, and the broader public about how to accelerate the “clean energy transition” in the United States. Legal academics have made valuable contributions to the literature in this field, developing a rich body of scholarship on a broad range of legal, policy, economic, and technological aspects of the clean energy transition. But this scholarship has for the most part ignored the role of rural electric cooperatives, which serve 15% of U.S. electricity consumers. This scholarship gap has important implications. Rural electric cooperatives, first created by local communities in the United States in the early part of the twentieth century to electrify rural America, now exclusively serve over half of the U.S. landmass. As such, these cooperatives are positioned to be key players in building land-intensive renewable energy resources and expanding the electric grid. And while cooperatives today own and operate fewer coal-fired power plants than they have in decades past, as not-for-profit entities, the drivers for cooperatives to retire existing carbon-intensive power plants and build new clean energy are fundamentally different than the drivers for other actors in the electricity sector shaped by profit motives. Understanding these differences is critical to avoid leaving rural America with billions of dollars of stranded assets that struggle to compete against low-cost clean energy.

In this Article, we draw on the structure and foundational principles underlying the cooperative form itself to offer a framework for rural electric cooperatives to thrive in the clean energy transition. Notably, the proposals we develop in this Article do not primarily rely on imposing new federal or state clean energy mandates on cooperatives, as has been the focus of the limited legal scholarship that exists to date. The long history of Congress and state legislatures allowing cooperatives to “self-regulate” makes exclusive reliance on such mandates a limited solution at best. Instead, we draw on the seven “Cooperative Principles” that govern all cooperatives—open and voluntary membership; democratic member control; members’ economic participation; autonomy and independence; education, training, and information; cooperation among cooperatives; and concern for community. Emphasis on these principles allows cooperatives to engage in the clean energy transition in a way that builds on their history and foundational principles as self-help organizations controlled by their members. Such an approach also recognizes the foundational role of member control within cooperatives, which has the potential to inform broader calls for increasing democratic accountability and racial and gender equity within the clean energy transition.

Keywords: rural electric cooperatives, clean energy, climate change, clean energy transition, exit fees, cooperative principles, cooperative governance, utility regulation, racial equity, social equity, clean energy mandates, securitization, accelerated depreciation

JEL Classification: K23, K32, D4, Q3, Q4, Q5

Suggested Citation

Klass, Alexandra B. and Chan, Gabriel, Cooperative Clean Energy (November 21, 2020). 100 North Carolina Law Review 1 (2021), Available at SSRN: https://ssrn.com/abstract=3735189 or http://dx.doi.org/10.2139/ssrn.3735189

Alexandra B. Klass (Contact Author)

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States

Gabriel Chan

University of Minnesota - Minneapolis - Humphrey School of Public Affairs ( email )

130 Humphrey School, 301 19th Ave. S
Minneapolis, MN 55455
United States
612-626-8910 (Phone)
612-625-3513 (Fax)

HOME PAGE: http://www.hhh.umn.edu/

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