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EMC returns money because it is a nonprofit by design

POSTED: October 5, 2011 1:00 a.m.

The Times Opinion section recently included a letter by Lenny Baker on private vs. public utilities and distribution of funds from profits.

It is very difficult to determine where he gets information, because unless his effort is humor, he appears to have it exactly reversed. This is an attempt to answer his questions and help to educate him.

EMCs are electric membership corporations, taken from originally named REAs that were franchised by President Franklin D. Roosevelt about 1935 with low interest federal funds (taxpayer money) to electrify the rural United States.

The private utilities had observed that this could never be feasible due to high cost of construction compared to low return on investment because of very low density of customers per mile, and consequently they refused to become involved. 

Since they were declared nonprofit, the EMCs’ charter requires a distribution of any profit annually to its member users.

Many of the EMCs in the U.S. have become profitable due to the high density of users and high loads now existing in their originally so-called rural territories. However, they remain co-ops and do not have customers but instead members, and are not private enterprise; no stock is available.

Conversely, Georgia Power is a section of the Southern Co. and its profit distribution is in the form of dividends to private stockholders, who also hope for stock value to appreciate over elapsed time. This is private enterprise and the stock is available to you. 

While private water companies serving the public for profit do exist, most water utilities are public facilities serving only the city or area where they are located. They cannot provide profit returns because there is none.

Clarence Huhman
Dahlonega



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