August 2010
Electric Co-ops: A Major Force
in the State’s Economy
by Keven Groenewold
Many of us sit down every holiday season to watch the cinema masterpiece “It’s A Wonderful Life.” In this classic, George Bailey finds out what the world is like if he had never existed. The world becomes a much bleaker place without him.
Recently, the rural electric cooperatives in New Mexico commissioned a study to look at their impact on the economy in New Mexico. The results were an eye opener. New Mexico’s rural residents formed electric cooperatives to provide themselves with electric power. In forming these cooperatives, their goal was to improve the quality of their lives and work, thereby, contributing to the development of their communities.
The network of rural electric cooperatives has become a major force in New Mexico’s economy. In New Mexico, electric cooperatives have total assets of over $1.5 billion, total retail revenues are $463 million and total retail power sales are 5.1 million megawatt-hours.
New Mexico rural electric cooperatives operate in 32 of the 33 counties. The co-ops provide electric service to 206,071 rural customers and maintain 44,486 miles of power lines. These cooperatives serve a key function in New Mexico and also contribute to the local economy through operational expenditures of the cooperatives, including wages, which increase the demand for the products of other industries and the earnings of worker households. Cooperatives, through investment spending on plant and equipment, raise the demand for the construction trades and for products produced in various capital goods industries.
As of 2008, rural electric cooperatives provide direct employment to 789 full time workers. Each dollar spent by cooperatives finances additional rounds of spending within the state. The effects of this re-spending are termed multiplier effects. In 2008, the rural electric cooperatives increased total output statewide by $757,022,695, increased or sustained employment by 3,570, increased earnings by $170,442,810, and increased state gross domestic product by $451,682,116.
Cooperatives are exempt from corporate income tax at the state and federal levels because of their not-for-profit status. However, they are subject to sales, property, and other taxes; and employees pay taxes on income earned. In addition, the multiplier effects that arise from cooperative operations generate state tax revenue through increased income and employment. Rural electric cooperatives operations generated, directly and indirectly, $39,829,867 in gross receipts revenue to state and local government, $4,442,456 in state personal income taxes, and $8 million in property taxes.
New Mexico rural electric cooperative members are also committed to providing renewable energy to their consumer-owners. This commitment is reflected in the Cimarron I Solar Project, a 30-megawatt, 500,000 panel solar photovoltaic power plant, which when completed, will be the state’s largest photovoltaic project. Cimarron I is being developed by Tri-State Generation and Transmission Association. A workforce of 120 to 140 construction personnel will be employed during construction.
Cimarron I will be located on a 250-acre parcel of land in Colfax County, between the communities of Cimarron and Springer. The plant will produce enough electricity to service 9,000 homes. Cimarron I Solar Project will contribute significantly to helping the cooperatives meet their commitment to reducing carbon emissions. Carbon emissions will be reduced by 57,000 tons per year, which translates to 1.4 million tons over the 25-year life of the plant.
The study concludes that New Mexico’s rural electric cooperatives contribute much more to the rural economy than electric power. All of our member-owners should be proud of what the electric cooperatives have accomplished.