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Issue 5

Do investor owned utilities and rural electric cooperatives work together?

You bet! The history of utility company and utility cooperatives working together goes back to the beginning of the Rural Electrification Administration (REA) activity in North Dakota. As the various rural electric cooperatives formed during the 1930s, they needed electricity to meet the rapidly growing demands of their rural customers. They purchased power through contracts with North Dakota's investor-owned utility companies, who delivered the energy across their own transmission lines.

Supply contracts for power were common and remained in place until the United States Government entered the private electricity market. When the government built and started to operate hydroelectric dams and power plants, the REA started to provide funding for the other elements necessary for an integrated electric system. With these major changes in the market, long term supply contracts between cooperatives and IOUs came to an end.

The federal government and the REA seemed more interested in building a government-owned electric supply system than they were in just providing electricity to unserved areas of the nation, however. When investor-owned utility companies in North Dakota applied for REA funding to build additional generation facilities to supply power to the co-ops, they were denied.

As the utility industry has matured in North Dakota, however, supply contracts once again are part of everyday utility operations. Further, joint transmission and maintenance agreements between the various utilities reduce duplications and provide economies of operation.

Investor-owned and co-op systems are intertwined. They rely on each other to provide reliable electric service to their respective consumers. That's one of the reasons that--if we are to enter a fully competitive retail and wholesale electricity market--all utility organizations must be on equal legislative and regulatory footings.