Wednesday, May 12, 2010

Solving Rural Electrification Problems: New Wine in Old Bottles?

Strong institutions, favorable financing, clear service territories, encouraging productive uses, reducing drudgery for women, and local involvement.  Do these all sound like familiar prescriptions for successful rural electrification?

Rural Electrification Administration Advertisement
Source: NRECA
In fact they encompass some of the eight steps to successful rural electrification highlighted in a previous blog. Recently I was doing a bit of research on the United States Rural Electrification Administration (REA) and I came across some interesting quotes that illustrate many of these points—some from the 1930s no less.

Before plunging into the quotes, some salient facts for those that do not live in the US—or for those living in urban areas in the US! The United States beginning in the 1930s began implementing a new rural electrification program as part of Roosevelt’s New Deal that was based on a newly created government agency called the Rural Electrification Administration. This government agency was created not to carry out rural electrification projects, but to support their implementation through electricity distribution companies called rural electric cooperatives. These cooperatives were and still are private, independent electric utilities anchored firmly in the communities that they serve. Today there are more than 900 electric cooperatives in the United States providing reliable electricity service to 42 million Americans while maintaining a unique consumer-focused approach to business. For more facts see US Utility Fact Sheet published by the National Rural Electric Cooperative Association.

With this background, it is now time for the quotes which have been paraphrased to provide a better context for understanding them.  

See much more below the break....
New Institutions, Technical Assistance and Long Term Financing

Lyndon Johnson Campaigning for Senate in 1941
Source:  LBJ Library--Austin American-Statesman
The first quote from Paul Wolman in 2007 is from a chapter in my recent book The Challenge of Rural Electrification: Strategies for Developing Countries. This is to provide a historical perspective on the US rural electric cooperative electricity distribution model. Paul Wolman is an economic historian.

He states that the passage of the Rural Electrification Act in 1936 focused the newly created Rural Electrification Administration on financing cooperatives and providing them with technical assistance in the construction, operation, and maintenance of rural distribution lines. The Rural Electrification Administration was technically empowered to lend for construction generation, transmission and distribution lines, but early on it disbursed funds largely for distribution lines and home wiring. The loans funds would go strictly toward amortizing cooperative electricity company debt and maintaining cooperative facilities. The terms of the loans for distribution lines were 25 years. (Paraphrased)

Local Participation and Conflict Over Service Territory

Local Participation in Cooperatives
Source:  RE Cooperatives
The second quote comes from John Carmody who was the second administrator of the REA, He served between 1937-1939. Carmody was outspoken and believed that farm people themselves would have to take initiative if they wanted to get electricity. His strategy included using agents and farm advisers to publicize meetings and raise awareness of rural electrification initiatives. As background, he refers to spite lines. The spite lines drew their rationale from wording in the Rural Electrification Act that forbade the cooperatives from building lines within about a mile of utility company lines. These were electricity lines built by the much larger private power companies to population centers in rural areas.  The power companies were not necessarily interested in developing these markets immediately, but rather were interested in preventing the cooperatives from gaining access to such towns and thus making the rural electric cooperatives financially unsustainable.

Mr. Carmody: We Want Lights
Source:  New Deal Network Photo Library
He observed the following in a hand written note on the back of the photo to the left taken in 1930s. We (the REA) had some trouble with the Georgia Power Company in those early days because they were building "spite lines” to take (the highest population rural) markets away from rural cooperatives. Like other private power companies that couldn't see the rural market before REA started, they suddenly became interested either to discourage formation of rural cooperatives or to hinder progress by "spite lines." Georgia Power Co. offered to take all REA projects in Georgia "and thereby relieve REA of the expense of teaching use of electricity in rural areas." I reminded Mr. Collier (of Georgia Power) that I could think of no better way to accomplish what the private power companies previously were saying about the cooperatives, and that was that we would buy them (spite lines) for a song. We finally bought some of these spite lines for the cooperatives and rural Georgia went on to become one of the most widely electrified states. I wonder why so many people in private industry think government administrators are simple minded. Well, we went ahead in Georgia, as elsewhere, minded our own business, fulfilled our obligations and built a strong REA. (Paraphrased.  The original which is in the Franklin D. Roosevelt Library and is available though the following link. )

Productive Uses of Electricity and Reducing Women’s Drudgery

The third quote is from a newsletter called Connections which is the quarterly for members of the Women’s International Network of Utility Professionals and the issue is Summer 2002.   The article by Gina M. Troppa of Illinois Country Living makes the following observation about one of the early women involved in promoting both household and productive uses of electricity.

Washing by Hand Before Electricity 1930s
Source: New Deal Network Photo Library
The quote is paraphrased as follows.  In 1935, Louisan Mamer responded to a local newspaper ad for a position at the newly created Rural Electrification Administration (REA) and began a lifelong career of educating rural Americans on the uses of electricity… Mamer attended to this need by establishing the REA Farm Show in 1938 in Iowa on a co-op farm near Davenport. Mamer says, “I took the REA Farm Show through Iowa that first year and into Nebraska in the fall and winter months. It came back to Illinois the next year and then started a tour of all of the states that have electrical co-ops. The REA Farm Show ran until war time, in 1942.”

Lights, Radio and Clock
Source: New Deal Network Photo Library
The REA Farm Show was often referred to as the REA “circus” because it was usually held outdoors in large tents. The show was a popular and effective means of promoting electric cooperative growth, farm and home electrical equipment, and the wise use of electricity. Farmers and their families attended the events by the thousands. All were eager to learn more about the modern laborsaving benefits of electricity and electrical appliances. “One of the reasons for starting the farm show was that it was difficult to get electrical farm equipment to show in rural areas. So, we got it from the manufacturer and carried it on a truck from one place to another,” says Mamer. The REA circus and Mamer’s demonstrations were effective. Some farmers would purchase products on the spot because they were so amazed at how easily the equipment worked. The first thing people wanted installed in their homes was ceiling lighting, but women were also interested in irons, washing machines and refrigerators. Mamer recognized the impact that electricity would have on women in the home, and her efforts greatly affected rural women’s lives. (Paraphrased)

Today we have learned that the principles involved in promoting rural electrification are more important than the actual institutional model.  But it is clear that even the US in the 1930s faced many of the same problems as electricity companies in developing countries today.  I guess that the new efforts today are somewhat like putting new wine in old bottles.  That is you have to learn from the past while solving the problems of today.

So are these lessons still applicable today?  Or are they outdated and irrelevant?  Leave your comments and suggestions.


Anonymous said...

Where did you find your information on Spite Lines? This is the first I have heard of them. Interesting topic.

Anonymous said...

Where did you find your information on Spite Lines. I have found very little about them online.

Douglas F. Barnes..... said...

You can look up Clayton Brown 1980. Also, in the USA chapter of The Challenge of Rural Electrification there is a short discussion.

Finally here is a link of to an old letter than mentions spite lines.