Balancing Act – Electric Cooperative Set Rates Based on People, Not Profit
By: Jeff McCallister
Last February, WKYC-TV in Cincinnati had a warning for its viewers: “Get ready, Ohio: Your energy bill will be higher this summer.”
In April, an AEP Ohio official told WBNS-TV in Columbus that customers should expect their bills to jump by an average of $27 beginning in June.
“Electricity price surge,” screamed a headline on Cleveland.com in late July, over a story that said Ohioans were seeing increases that averaged 10% to 15%. The story explained that a record-breaking auction in the wholesale electricity market last year had set higher prices for future supply, and that was coming to fruition.
In late July, the Ohio Capital Journal said energy bills are likely to tick up again in 2026 after the wholesale auction hit its maximum limit again this summer.
“Duke Energy bills jump in Southwest Ohio; more increases are on the way” —Cincinnati Enquirer, Sept. 23, 2025.
In all those news stories, there was little to no mention that electricity rates for Ohio’s electric cooperative members remained relatively stable — and in fact, as of mid-September, the price co-op members pay specifically for the generated power they use was the lowest in the state.
“We have always believed our business model is good for long-term stability in the rates paid by our members,” says Craig Grooms, president and CEO of Buckeye Power, which provides the electricity that Ohio’s co-ops distribute to their members.
“We’re seeing the benefits of that approach right now because there’s so much uncertainty in our industry— around load growth that may or may not be coming from data centers, around regulatory issues, and around the volatility of the energy markets,” Grooms says. “As cooperatives, we have certain advantages that can insulate us from a lot of that.”
What makes co-ops different?
Unlike investor-owned utilities, electric cooperatives are member-owned and community-driven. The first co-ops were formed in the 1930s to bring power to areas that big investor-owned utilities ignored. Today, 25 co-ops serve nearly a million people in 77 of Ohio’s 88 counties. Nationwide, there are more than 800 electric co-ops.
When the co-ops first formed, most bought their wholesale power from the larger utilities or from nearby municipal power plants. But in 1959, Ohio’s co-ops joined together to form Buckeye Power, a generation and transmission cooperative, to provide their electricity.
Through Buckeye and in partnership with American Electric Power, the co-ops built their own generating facility, and today Buckeye Power, through that Cardinal Power Plant in Brilliant and other facilities, generates more than enough electricity to meet the co-ops’ needs. (Buckeye also delivers significant energy, generated from two natural gas “peaking” plants, its solar arrays, numerous biomass facilities around the state, and an entitlement to a portion of the hydropower generated by Niagara Falls.)
It’s that local ownership of power generation that puts the co-ops in a unique position when it comes to keeping rates stable.
The role of member governance
Local control is one of the most important features of co-op pricing. Each co-op elects a governing board from among its members, and each co-op is represented on the board of Buckeye Power.
Among other duties, those boards oversee financial decisions. While each individual co-op determines its own unique rate structure, which includes the actual cost to deliver power to each member, the wholesale rates for generating and transmitting that power are set by the Buckeye board.
Owning those generation sources means co-op rates are more insulated from the wide swings of the competitive power markets, where wholesale rates are set through bidding and auctions. Instead, co-ops operate under a cost-based model — just as each co-op’s service fee is based on what it actually costs to deliver electricity to members, the wholesale rate is based on what it actually costs to generate that power and get it to the co-ops.
Key components in calculating wholesale rates include:
- Fuel and operating costs for generation facilities
- Debt payments on capital investments, such as powerplants or transmission lines
- Maintenance and staffing
- Reserve margins to ensure reliability and plan forfuture needs
Balancing reliability and affordability
Still, wholesale rate setting is a balancing act. Co-ops must ensure they’re charging enough to cover their costs and maintain reliability without overburdening members with high rates. That often means planning years ahead — forecasting demand, securing fuel contracts, and investing in resilient infrastructure —and that can be a difficult task when there’s so much uncertainty in the industry.
Also, because co-ops are not for profit, any revenue above what’s needed to run the system is returned to members over time as capital credits — and just as the local co-ops return credits to their members, Buckeye Power returns capital credits to the co-ops.
That system of member governance, local ownership of generation, and not-for-profit operation helps co-ops keep rates more stable than those of investor-owned utilities, which are driven to generate a profit for their shareholders and are rarely accountable to their customers the way co-ops are accountable to their members.
“In the end, power rates in the co-op world aren’t about profit,” Grooms says, “they’re about people, and that makes a huge difference.”
