US electric co-ops deliver substantial economic benefits to the country, providing nearly 623,000 jobs and adding an average US$111bn a year to the national GDP, says a study from sector body NRECA.
The sector delivers $51bn in pay and benefits each year to its workforce, says the study, and contributed $554bn to the national GDP between 2018 and 2022 – an average of $111bn per year. Co-ops also generated $135bn in federal, state and local tax revenue over this period.
Indirect effects include the manufacturing and supply of equipment and materials used by co-ops, and employees in the direct and indirect industries spending income in their communities.
The study does not include additional non-market benefits that are enabled through electric co-ops providing safe and reliable electricity, “which is foundational to the modern economy”.
The Economic Powerhouses: The Economic Impacts of America’s Electric Cooperatives report was commissioned by NRECA and the National Rural Utilities Cooperative Finance Corp (CFC) and conducted by Strategen Consulting, an energy strategy consultancy.
“America’s electric co-operatives are crucial engines of economic development both nationally and at home in their local communities,“ it says. “In addition to providing safe, affordable, and reliable electricity to their consumer-members, co-ops create benefits that extend beyond the electric sector.
“As locally engaged member-owned electric utilities, co-ops conduct economic activity through the generation, transmission, and distribution of electricity, including investments in new capital, operating and maintenance expenses, and disbursement of capital credits. These activities not only impact the industries in which they directly occur, but also drive economic activity across multiple sectors, creating value for local, statewide, and national economies.”
From 2018-2022, electric co-operatives spent approximately $409bn in the US economy, the study found. Of this, $303bn was spent on operations, $75bn was invested in capital improvement projects, $24bn went on maintenance, and $7bn was returned to consumer-members in the form of retired capital credits.
This spending generated further economic stimulus over the five-year period, creating more than $1.1tn in total sales output and contributing $554bn to the national GDP.
This provided nearly 623,000 jobs per year for Americans nationwide, and $257bn in labour income over the five-year period, says the study.
At local level, researchers found that co-ops are responsible for $791bn of total output and $374bn in value added to the communities they serve. Through this activity, electric co-ops create nearly 424,000 local jobs per year, leading to $166bn in labour income for local residents.
These direct, indirect, and induced impacts all generate tax revenues at the federal, state, and local levels. Strategen researchers tracked all of these and found that from 2018 through 2022, electric co-op activity generated $40.6b in federal tax.
“This report quantifies what many American families and businesses know well – electric co-operatives are powerful engines of economic development in their local communities,” said NRECA CEO Jim Matheson. “Affordable and reliable electricity is a key ingredient for a successful economy. Electric co-ops are focused on the long-term success of local communities as they keep the lights on and power economic growth.”
CEF CEO Andrew Donn added: “We’re seeing electric co-operatives expand their community investments and foster opportunities beyond traditional poles and wires – from creating business incubators to building broadband networks and attracting new employers.
“These endeavors are further advancing the billion-dollar economic impact of electric cooperatives locally and nationally.”