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OPINION | REX NELSON: Saving rural Arkansas

by Rex Nelson | September 4, 2022 at 1:53 a.m.

The Great Depression slowed economic progress across the country to a crawl. As late as the mid-1930s, nine out of 10 rural homes in the United States were without electric service.

According to the National Rural Electric Cooperative Association: "Farmers milked cows by hand in the dim light of a kerosene lantern, and families relied on the wood range and washboard for cooking and cleaning. The unavailability of electricity in rural areas kept their economies entirely dependent on agriculture. Factories and businesses, of course, preferred to locate in cities where electric power was easily acquired.

"For many years, power companies ignored rural areas. The first official action of the federal government pointing the way to the present rural electrification program came with passage of the Tennessee Valley Authority Act in May 1933. This act authorized the TVA board to construct transmission lines to serve 'farms and small villages that are not otherwise supplied with electricity at reasonable rates.'"

It was long rumored that President Franklin D. Roosevelt considered creating an Arkansas River Valley Authority, but met strong opposition from powerful Democratic Sen. Joe T. Robinson of Arkansas. Robinson was close to Arkansas Power & Light Co. founder Harvey Couch, who didn't want the government-subsidized competition.

On May 11, 1935, Roosevelt signed Executive Order No. 7037, establishing the Rural Electrification Administration. A year later, the Rural Electrification Act was passed by Congress, and the REA lending program began.

The NRECA notes: "Within months, it became evident to REA officials that established investor-owned utilities weren't interested in using federal loan funds to serve sparsely populated rural areas. But loan applications from farmer-based cooperatives poured in, and REA soon realized electric cooperatives would be the entities to make rural electrification a reality. In 1937, REA drafted the Electric Cooperative Corporation Act, a model law that states could adopt to enable formation and operation of not-for-profit, consumer-owned electric cooperatives.

"Within four years following the close of World War II, the number of rural electric systems doubled, the number of consumers connected more than tripled and the miles of energized line grew more than five-fold. By 1953, more than 90 percent of U.S. farms had electricity. Today, 99 percent of the nation's farms have electric service."

Even though Arkansas had a population of 1.95 million in 1940, the vast majority of rural Arkansans had no electric service. In 1937, Gov. Carl Bailey had signed into law Act 342 to provide a legal basis for electric cooperatives to incorporate. The first electric cooperative utility pole in the state was erected in 1937 by First Electric Cooperative in Jacksonville.

Bailey appointed public utilities commissoners who were sympathetic to rural cooperatives. The state issued rulings that set affordable wholesale rates for cooperatives, opening the way for REA loan approval.

The Arkansas Farm Bureau Federation and the University of Arkansas Cooperative Extension Service also worked to organize farmers, sign up cooperative members and review plans for rural electric systems.

The cooperatives now cover 60 percent of the state. In 1942, cooperatives pooled their resources to form a statewide association, Arkansas Electric Cooperatives Inc. The distribution cooperatives formed a closely associated generation and transmission cooperative, Arkansas Electric Cooperative Corp., in 1949.

AECC, AECI and the state's 17 electric distribution cooperatives now collectively market themselves as the Electric Cooperatives of Arkansas.

"Providing electricity to Arkansas farms and communities of fewer than 2,500 was costly," Mary Suter writes for the Central Arkansas Library System's Encyclopedia of Arkansas. "Rural areas averaged fewer than five customers per mile of electric line, compared with an average of 15 to 20 per mile in urban areas. To recoup the costs of building a line, and to make a profit, private utilities charged rural customers more per kilowatt hour than they charged urban residents. Because of high rates, farmers used an average of 40 kilowatt hours a month, while urban residents typically used at least 500.

"Low use by rural customers made it less profitable for private utility companies to serve them. Before REA, rural electric service was limited. In 1930, 2.1 percent of Arkansas farms had electricity. Most received it from central power stations such as those operated by AP&L. Couch understood that electrifying farms could raise farm incomes. AP&L had electrified rice farms around Stuttgart by 1918."

In 1935, Couch began an additional rural program by building lines to Prattsville in Grant County. AP&L was, in fact, the first private utility in the country to offer low-cost financing to wire rural homes. Couch also set up a monthly payment plan for buying appliances. The cooperatives later adopted Couch's so-called Arkansas Plan.

"Three electric cooperatives were incorporated by June 1937," Suter writes. "There were First Electric Cooperative, serving parts of Lonoke, Prairie and Pulaski counties; Woodruff Electric Cooperative, serving part of Woodruff County; and Farmers Electric Cooperative, serving part of Jackson County. Four more cooperatives were incorpoarated later in 1937.

"First Electric energized an initial 58 miles of line on April 15, 1938, after borrowing $190,000 from REA to build 211 miles of line to serve 675 members. All seven of the 1937 cooperatives energized lines the next year. The last cooperative, Rich Mountain, was incorporated in 1945. By 1950, 67 percent of the state's farms had been electrified."

On this Monday, I'm sitting in a large ballroom at the Red Wolf Convention Center in Jonesboro, preparing to address the cooperatives' summer meeting. Hundreds of people from across the state are in attendance.

AECC is owned by its 17 member cooperatives with 34 board members and 325 employees. AECI is also owned by the 17 cooperatives with 315 employees.

AECC, as a wholesale electric provider, has more than $727 million in annual sales. It owns or contracts for 4,280 megawatts of generating capacity and then transmits power through two regional transmission organizations. AECC serves 1.3 million members and returns millions of dollars to member cooperatives each year.

AECI, meanwhile, is involved in utility material sales, right-of-way clearing and vegetation management, substation construction, high-voltage equipment testing, governmental affairs and public relations. Its Arkansas Living magazine has an estimated 950,000 readers each month.

Vernon "Buddy" Hasten became president and CEO of AECC and AECI in October 2019. Hasten, an Iowa native, enlisted in the U.S. Navy in 1986 as a submarine reactor operator and moved quickly up the ranks. The Auburn University graduate was assigned to nuclear submarines and shore assignments during a 20-year career. In his final assignment, he was technical assistant to the deputy director for fast-attack submarines.

After retiring from the Navy in May 2007, Hasten returned to Iowa as regional director of generation for Alliant Energy's Iowa-based power plants. He joined Associated Electric Cooperatives in Missouri in 2011 as a plant manager. Hasten was promoted to senior manager of plant operations and reliability in September 2012 and vice president of engineering and construction in January 2018.

I've long believed that electrification saved rural Arkansas in the 20th century. It allowed people to get out of the heat, refrigerate their food and mechanize farm operations.

Now, as I tell those gathered in Jonesboro, broadband Internet services are just as important to rural Arkansas in the 21st century as electricity was in the 20th century. Under Hasten's leadership, cooperatives are making a major move into broadband. More on that in next Sunday's column.

Rex Nelson is a senior editor at the Arkansas Democrat-Gazette.

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