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Rural Electrification in the United States,1930–1950 An Institutional, Political, and Social Perspective Paul Wolman. March 8, 2006 Energy Week at the World Bank. The United States as a Developing Country. Agriculture, the U.S. Rural South, 1930s.
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Rural Electrification in the United States,1930–1950An Institutional, Political, and Social PerspectivePaul Wolman March 8, 2006 Energy Week at the World Bank
The United States as a Developing Country Agriculture, the U.S. Rural South, 1930s Left: Boy with hoe. North Carolina, 1936. Right:Tenant tobacco and corn farmer, Hwy. 144, Person County, NC, July 1939. Nitrate negatives, Farm Security Administration. Photos: Dorothea Lange.
The United States as a Developing Country Conditions in the U.S. Rural South, 1930s • Low farm prices, agricultural depression, 1920s– • Large population movements to cities and West • High levels of debt and farm-mortgage foreclosure • High rates of sharecropping and tenancy • Poor health, nutrition, sanitation (especially for women and children) • Low population densities • Rural electrification: less than 15%.
The United States as a Developing Country The U.S. Electrical Industry, 1930 • Nonfarm electrification: 84% • Large utility holding companies controlled 75% or more of generating capacity • Multiple regional grid systems • Utilities “grew out of jurisdictions” of metropolitan, county, and state authority • Lack of effective national regulation • Little interest in RE because of lowdensity (U.S. trailed most of Europe)
Origins of the RE Program • Progressive initiatives • early 1900s (e.g., Country Life Movement; T. Roosevelt, L. H. Bailey, G. Pinchot) • (Republican) progressives • engineering and political ideas, 1920s (e.g., G. Pinchot and M. Cooke, “Giant Power”) • (Democratic) New Deal,1930s (e.g., F.D. Roosevelt, TVA, M. Cooke, D. Lilienthal)
Origins of the RE Program U.S. Rural Electrification Administration • REA Founded: FDR executive action,1935 • Rural Electrification Act of 1936 • Utilities would not participate in distribution • Utilities did participate in generation and wholesale electricity transmission
Origins of the RE Program • Cooperativesbecame focus • “Rochdale” principles • Egalitarian “area coverage” versus cherry-picking by utilities
Early Difficulties • RE about 12 percent in the rural U.S. in 1935 • Existing “RE”not really rural • primarily near higher-demand towns or large-scale farms • Utilities sought to subvert RE (e.g., “spite lines”) • Opposition from some state commissions • Opposition from academic and agricultural extension
REA and Co-ops Respond • Farmers had long resented utilities • REA mobilized technical and support and innovation, cut costs • REA construction costs 1/3 to 1/2 of utilities • Electricity rates 1/3 to 1/2 of utilities • Perceived equity of REA program and co-ops solidified popular support
Financial Viability • Distribution loansat 3% • Early lending heaviest in South and Midwest • Nonprofit co-ops had to use all revenue and operating income to amortize debt to REA/RFC • Term for distribution loans, 25 years (extendable to 30). No formal subsidies • Lending for household wiring and appliances, terms up to 66% of appliances’ lifespan, capped at 5 years • Wholesale electricity pricing constrained by TVA and federal power sales@ 2 to 5¢/kWh
A Typical Rural Electric Cooperative • Consumer membership — 1,000 • Total distribution line — 425 miles • Average monthly bill (100 kWh) — $5 to $6 • Minimum consumption averaging 60 kWh/mo per customer (REA/RFC loan required) • “Lifeline” rates for poor consumers • Long-term financing for wiring (“Arkansas Plan”) and appliances(EHFA)
Household Diary, Oklahoma 1939–50 • July 27, 1939—signed for [cooperative membership] • June 1, 1940—Uncle Lark wired house • August 8, 1940—Got electricity • August 26, 1940—Bought a washer • October 29, 1940—Bought a radio • January 6, 1941—Wired milk barn • July 25, 1941—Bought iron • September 19, 1941—Bought refrigerator • January 21, 1942—Wired Dutton Church • December 3, 1942—Bought mixer, radio • December 31, 1948—Bought deep freezer • August 30, 1950—Bought sewing machine Source: Oklahoma Electric Cooperative.
Consumer Acceptance The REA sponsored fairs and campaigns aimed at promoting connections and demand Co-op members enjoying the benefits of electrification—listening to the radio
Impact of the RE Program From zero consumers to— • 3.4 million consumer/members served • 1.1 million miles of distribution line built at costs ~1/2 those of utilities • 1,007 self-sustaining coops (vs. 2 in 1935) • 147kWh/month average rural household consumption
Key Success Factors • Technical assistance from REA key to low line construction costs and power rates • Security and stability of funding in initial years • Pace Act 1944 extended REA’s term indefinitely • EHFA and “Arkansas” plans— funded acquisition of appliances • Egalitarian “area coverage” united rural residents around co-ops • Co-ops’ simple self-governance, bill collection • Suprapartisan political support —Progressives, New Deal Democrats, and even utilities (in generation)
Conclusions • USRE a product of “Great Depression” but also of more general consensus on rural development • However, enfranchisement of African Americans and Native Americans lagged behind that of whites • RE programs important to social stabilization • Shows value of mixed / joint venture with public funding, regulation, and popular private nonprofit ownership • Co-ops still operating effectively • “Electrification is not an implacable force moving through history but a social process that varies from one time period to another, from one culture to another” • David Nye, Electrifying America