Alabama’s electric cooperatives continue to power economic development

A recent economic study demonstrates the significant economic impact of electric cooperatives nationally and in Alabama.

In the United States, the study showed that electric cooperatives contributed $554 billion to the nation’s gross domestic product between 2018 and 2022, for an average of $111 billion annually.

In Alabama, over the same five-year period, generation and distribution cooperatives contributed $7.5 billion to Alabama’s Gross State Product (GSP), were responsible for an average of 9,408 jobs in the state annually, $3.8 billion in labor income, and $456 million paid in federal taxes and $911.3 million in state taxes.

The study found that Alabama’s cooperatives spent $9.3 billion on capital investment, operations and maintenance activities, and retired $95 million in capital credits paid to consumer members. Through these expenditures, cooperatives drive economic benefits throughout the state, including impacts specifically in the local communities they serve.

“This analysis is a confirmation of the important role Alabama’s electric distribution and generation and transmission cooperatives play in our state and in the communities we serve,” says Karl Rayborn, president and CEO of the Alabama Rural Electric Association, the statewide trade association serving Alabama’s 22 electric distribution cooperatives, PowerSouth Energy Cooperative and the Tennessee Valley Authority.

Alabama’s electric cooperatives began bringing electricity to the homes and businesses of rural Alabamans in the mid-1930s, and today deliver power to more than 1 million persons, approximately one quarter of the state’s population, and cover more than 70 percent of the state’s land mass.

“For nearly a century, electric cooperatives have been essential to the economic vitality and overall quality of life in communities nationwide,” said NRECA CEO Jim Matheson and CFC CEO Andrew Don. “America’s electric cooperatives made modern living in rural America possible. In the early 1930s nearly 90% of American farms lacked electricity. Thanks to cooperatives, by the early 1950s more than 90% of America’s farms enjoyed the benefits of co-op provided power. Today, electric cooperatives power over 21.5 million businesses, homes, schools and farms in 48 states.”

Nationwide, between 2018 and 2022, electric cooperatives generated an average of nearly 623,000 jobs annually for Americans, providing $51 billion in pay and benefits. By comparison, FedEx, the nation’s fifth largest private employer, directly employs 547,000 workers worldwide.

Because electric cooperatives serve 92% of the nation’s “persistent poverty counties,” the co-op contribution to local economies is particularly critical. During the five year period, electric co-ops collectively returned $7 billion to their members, further benefitting the communities they serve.

In Alabama, local community impact within the counties directly served by cooperatives was significant. Electric cooperatives accounted for $7.2 billion in value added to the local economy, $3.1 billion in local labor income and $619 million in local taxes, the analysis showed.

Much of the economic impact can be traced to investments electric cooperatives made in the nation’s infrastructure. Between 2018 and 2022, these investments totaled nearly $409 billion nationwide, including $75 billion on capital expenses, $304 billion in operational costs and $24 billion toward maintenance activities.

Electric cooperatives are now repeating history by delivering affordable, reliable broadband service. This new service is creating new ways to live, learn and earn in sparsely populated areas. Today, co-ops deliver broadband service to 675,000 homes and constitute the fastest growing group of broadband providers infusing new economic opportunities to America’s rural communities.

The economic analysis was commissioned by the National Rural Electric Cooperative Association (NRECA) and the National Rural Utilities Cooperative Finance Corporation (CFC), and conducted by Strategen Consulting, Inc.