Undemocratic at Heart: Transforming the South's Utility Coops

Steve Suitts

Vol. 18, No. 3-4, 1996 pp. 27-29

The enduring, pivotal significance of the utility co-op movement is demonstrated by the simple, historical fact that never has there been another economic institution that has so many resources, that has so vital a role to play in the rural South's livelihood, and that is within the reach of democratic transformation. Utility co-ops offer a rare opportunity in America's private sector to unite democracy and development for the long-term direct benefit of the poor on a broad societal scale. At the moment, this effort has even more immediate significance, as the Congress has restructured vastly the terms by which the government assists the poor. The rural South is where the impact of the new welfare system will come home first for the simple reason that it is where jobs are scarcest. Amid welfare "reform" and all of the dangers and potential cruelties it includes, the utility co-op movement is a way in which to respond by attempting to link the needs of the poor with opportunities for economic development -- for the creation of jobs and job skills.

The rural South is also where the majority of rural poor African Americans live, as well as the ancestral home of a majority of African Americans. There is no place more important to the rural poor, but especially the rural black poor, than the rural South. Not incidentally, it is where the greatest disrespect for the democratic principles of the utility co-op movement has been evident.

Telephone and electric co-ops, which are meant to be run by the people they serve, provide the basic utility services for much of the rural South. As we watch government support for the poor diminish over the next few years, nothing will come home faster than whether people can afford to pay their utilities, to keep their homes heated in winter, and to keep from suffering enormously in the summer heat of the South. These largely unregulated utility co-ops will make the decisions about what rates the poor pay.

Banks and utility co-ops employ more people than any other employer in the rural South, and are also where jobs are to be had in the future. Some of these jobs require high skills, some require low skills. What utility co-ops could provide the poor, if they were equal opportunity employers and truly were governed by their members, is an opportunity for jobs and job creation. These institutions are vital in determining whether or not there is either homegrown or imported economic development. They supply the essential power for manufacturing and for technological development in rural areas. Unless these utility co-ops want economic development, want their local citizens to have jobs, they can play a very obstructionist role.

We also need to remember the federal government has provided utility co-ops, in recent years, with $30 million to $35 million in no-interest loans and grants to develop services to the poor. What those services are, whether they are important to local residents, whether they help to create jobs and by what means, are all now being decided by scattered handfuls of old white men -- the co-op boards of directors -- who believe that no one else in a democratic institution should control those decisions.

These are all reasons why, in the short term, utility co-ops are going to be influential. They are either going to help address some of the ongoing problems of the rural South, or they are going to exacerbate those problems, or they are going to stand on the sidelines and see those problems neglectfully enlarged.

The long term potential of utility co-ops is equally important. Co-ops in the South have around $14 billion in total assets. Put together, these co-ops constitute the


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assets of a major Fortune 500 company, assets that would be essentially available, by democratic process, to ad-dress the efforts of economic and social development of the rural South. Neither federal or state government, nor other private entities are going to invest that kind of money to build new initiatives. These co-op assets, consisting of trucks, machinery, phone lines, electrical lines, buildings, equipment, and all the things that create a capacity for the utilities to serve customers, form one of the few infrastructures of the rural South. It is the infra-structure upon which an entire new growth area of American productivity in information and technology is going to be built.

Some of the disadvantages of distance from what have historically been the centers of commerce -- the cities -- can be overcome by the use of technology. But this will not happen in a rural area served by a co-op unless those co-ops are democratically controlled, are truly concerned about, and run by, the people they serve. The potential for using this infrastructure to build rural life with all the advantages it provides, and with some of the jobs and industries of information and new technologies -- all of that potential rests on whether or not the utility co-ops are in fact, democratic and run for the development of their own members.

In an age where multinational corporations have no clear self-interest in the places where they are located, utilities and co-ops have a long-term self-interest in the people they serve. Utilities are landlocked; they can't string a line to Thailand or Indonesia. And ultimately, their welfare should depend on the welfare of the people they serve. The potential for building a future in which poverty is not the expected way of life for the rural South is not wholly decided by what will happen to the utility co-ops. But it is hard to imagine, in this day and age, with public policy and private initiative as they are, that poverty will ever diminish substantially in the rural South, until its major, primary economic institution -- the utility co-ops -- become democratically controlled and finally begin to serve the people who should be governing the institutions.

Utility co-ops have been undemocratic since their beginnings and have created a unique arrangement, in law and in practice. that allows them to perpetuate the elitist control of those who have little goodwill and a lot of self-interest in their continued antidemocratic operations. Efforts have been tried and most have failed. So what do we do?

There are no quick solutions. But what must happen is taken from the lessons of political participation in the South over the last several decades. The co-ops have generally adopted an approach of soliciting token repre-


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sentation from poor communities, and in some places, from poor white communities. The local elites have perpetuated themselves in office without holding elections, or by holding bogus elections. They have handpicked people from black communities or poor white communities to serve on the co-op boards in very small token numbers. This has at times given the appearance that they are willing to have all people that they serve represented. It's a pattern that is well-worn and as transparent as the old efforts to allow a few blacks to register in a county to blunt any criticism that blacks had no right to vote; or to handpick a few people to serve as a small minority of a board in order to blunt criticisms that a community had no representation.

Under the circumstances, what needs to happen is what happened in the development of political participation in government. The Department of Agriculture has created a "Governance Committee" that has virtually no guidelines by which to measure what co-ops are now doing. Yet it is a committee that has promised utility customers that it's going to insure that governance is fair. It is time for community groups and local leaders who are committed to fulfilling the promise of the co-ops to see what can be done in bringing about democratic control in full view of the Department of Agriculture's Governance Committee. In a way we're at a stage which is not unlike the late 1950s; that was when the federal government created the U.S. Civil Rights Commission with virtually no power to do anything about the denial of black folks' right to vote in the South -- who simply were sent out with a general mandate to see what was going on.

Activists have to treat the new Governance Commit-tee as activists treated the Civil Rights Commission in the late 1950s: as if it is a body of officials who, if they see wrong, will recognize it even if they're powerless to correct it. The case must now be made, once again, that simple democratic principles are not being observed in an institution where such principles should be required. And if those efforts to bring democracy begin to fail, as surely we must expect they will, than that has to be presented to the Governance Committee, just as the details of countless incidences of the denial of the right to vote were presented to the Civil Rights Commission in the 1950s. The work of activists helped build the case for a Commission and for regulations that had some power to make change.

The difficulty of this strategy is that this is a long-term process and there are very substantial short-term needs. To bridge that gap in time, between what is needed and how long it usually takes to get something changed, there simply has to be a greater awareness of urgency among those who are concerned about the rural South. This is a major political issue that cannot be secondary to the everyday machinations of Washington. There are people of goodwill in the Clinton Administration who should be outraged by what has happened and continues to happen. I think the activists of the rural South must now create circumstances where that outrage is seen and where old friends are called upon to act upon it.

The other difficulty here is that the era of the 1950s has passed and it is hard to recreate the kind of activism that people were engaged in at that time. When all it takes now is for enough folks to go to the polls in order to win political office in the Black Belt, it is difficult both for ordinary citizens and black leaders in those areas to think that they should return to tactics from a time when they had to stay outside the privileged circle and show some-one they couldn't get inside, although the rules of democracy say that they should. In other words, the co-ops have sustained what is essentially a form of segregation.

It seems such an anachronism that to dismantle the anti-democratic nature of the co-ops, people have to re-turn to techniques that were used to fight segregation in the 1950s. That is an approach to problem-solving that we find very difficult to imagine and to initiate today. Yet. I see no other way to make the case than for us to begin to repeat the same approaches -- with different technologies and different styles, perhaps -- that were used in redressing the denial of the right to vote in the rural South. The hope here is that it won't take thirty years.

As the damage of welfare reform begins to be evident and as those who supported welfare reform on both sides of the aisle in the Congress begin to see what they've done, there may be a real opportunity here for them to make partial amends by doing something that is so simple and so fundamental as requiring a quasi-public institution that by its very being should be democratically controlled to begin to live up to that promise, so there can be opportunities for the development of jobs for rural Southerners living in poverty. So it may be that the tragedy of welfare reform can bring some new possibilities for changes in the co-op utilities. That's the hope, and it maybe the best hope, and ironically, hope usually does spring from tragedy.

Steve Suitts is former executive director of the Southern Regional Council.