Rural electrics have cut their coal diet by more than half in seven years, but member-customers want more renewables

"Our members just wanted more renewables," said Luis

Reyes, CEO of Kit Carson Electric Cooperative in Taos,

N.M., the first distribution cooperative to negotiate an exit

from a generating co-op. (WSJ photo by Adria Malcom)

"U.S. utilities are moving to replace coal plants with renewable-energy sources, but the shift is happening more slowly at the cooperatives that serve much of rural America," Katherine Blunt reports for The Wall Street Journal. Electric cooperatives sourced 32 percent of their power from coal in 2019, according to industry data. By comparison, the U.S. as a whole got about 23% of its electricity from coal that year, a 42-year low, according to the Energy Information Administration."

Co-ops that generate electricity are switching sources; seven years ago, their coal share was 70%. But that's not fast enough for the smaller co-ops that only distribute electricity and are members of the generating co-ops. Under pressure from their consumer-members, "a growing number" of distribution co-ops "are agitating for a faster transition to wind and solar energy, which is cleaner and increasingly cheaper than coal power," Blunt reports. "That push is creating tension within the organizations, which exist to share the costs of generating and procuring electricity for less-populous areas—leading some members to break away," or at least look into breaking electric-purchase contracts.

"Co-ops, which provide power to about 42 million Americans, primarily in the Midwest and West, have remained more reliant on coal than investor-owned utilities in part because they don’t have the same means or motivation to retire coal plants," Blunt explains. "Because they are owned by customers, rather than shareholders, they can’t raise equity and instead rely mainly on debt for financing needs. They are exempt from federal income taxes and therefore can’t use renewable-energy tax credits. And many of the regions they serve rely on coal plants for jobs and tax revenue, making the prospect of closing them politically challenging. The issue has emerged as a key challenge to the ambitious targets set by the Biden administration and many states to reduce greenhouse-gas emissions. Co-op industry leaders recently met in Washington to discuss ways to handle debt associated with coal plants as well as gaining access to federal tax credits for renewable-energy development."

Coal is no longer the cheap choice for co-ops. "The cost of generating power from a new coal plant over its expected life is now at least $65 a megawatt-hour, according to investment bank Lazard, and can be as high as $159 a megawatt-hour," Blunt reports. "New wind and solar farms, by comparison, can generate power for as little as $26 and $29 a megawatt-hour, respectively."

Many co-ops hesitate to prematurely close coal plants because they still owe millions of dollars on them. They also worry about hurting local economies, says Chris Riley, CEO of Guzman Energy LLC, a wholesale power company founded to help co-ops buy cleaner, cheaper energy. "You’re spreading the positive economic benefit across a huge geographic area" by closing a coal plant, he told Blunt. "But you’re concentrating the negative impact in just a couple of towns and cities, those that have the coal plants and the coal mines."