The Rural Electrification Act and the Co-ops That Still Light the Countryside

On May 20, 1936, Franklin Roosevelt signed a short law with an unglamorous name. The Rural Electrification Act turned an emergency relief agency, created by executive order the year before, into a permanent lending program, and it told that program to make cheap, long-term loans to bring electric power to places the power companies had decided were not worth the trouble. At the time, the great majority of American farms had no electricity at all. Farm families pumped water by hand or by windmill, read by kerosene lamps, did laundry on washboards and kept food cold, if they could, with blocks of ice. A city dweller in the 1930s could listen to Roosevelt's fireside chats on an electric radio; a farm family a few miles outside town often needed a battery set or a neighbour's house to hear him. The men who wrote the law were a progressive Republican from Nebraska and a Democrat from the Texas cotton country. The organizations they made possible are still running, still owned by their members, and still deciding what kind of power flows to a large part of the country.

In short: The Rural Electrification Act of 1936 offered low-interest federal loans to bring power to farms, and because private utilities mostly declined, farmers organized their own nonprofit cooperatives to borrow the money. Within two decades most farms had electricity. Those co-ops still serve a large share of rural America, many still burn coal, and the decisions their member-elected boards make now are one of the least understood fronts in climate policy.

Why the wires stopped at the city limits

The private electric industry of the early twentieth century made a reasonable business calculation. Stringing a mile of line in a city reached hundreds of customers; stringing a mile of line in farm country might reach two or three. Rural customers used less power and cost more to serve. So the utilities built where the density was, and for farms they quoted prices for line extensions that few families could pay.

Other countries did better. Several European nations had electrified much of their countryside through public programs well before the United States did. American reformers noticed. One of them, Morris Llewellyn Cooke, a Philadelphia engineer who had spent years studying the power business, argued that rural lines could be built far more cheaply than the utilities claimed if they were designed for the purpose and financed patiently. Roosevelt made Cooke the first head of the Rural Electrification Administration when he created it by executive order in May 1935, as part of a large relief program.

At first, the REA expected private utilities to take its loans and build. Most declined. They doubted farmers would ever use enough power to make the lines pay, and some feared that cheap public money would set a precedent for competition. That refusal turned out to be one of the most consequential business decisions of the century, because it left the field to someone else.

A Nebraska Republican and a Texas Democrat

The permanent law came from two men who represented very different kinds of politics.

George Norris of Nebraska had spent decades in Congress as a progressive Republican, a man who fought his own party's leaders over railroad power, utility monopolies and the rules of the House itself. He had championed public power for years and was the leading Senate force behind the Tennessee Valley Authority. By the mid-1930s, he was drifting away from the Republican label; he won his last Senate race in 1936 as an independent.

Sam Rayburn was a Democrat from a rural district in northeast Texas who had grown up on a cotton farm and knew what life without electricity meant. He was a skilled legislator with deep ties to the House leadership and would go on to become one of the longest-serving Speakers in the chamber's history.

Their bill, often called the Norris-Rayburn Act, made the REA a statutory lending agency with a dedicated stream of loan money stretching over several years. It authorized loans to states, municipalities, private companies and, crucially, cooperatives and other nonprofit organizations. Rural people could now borrow federal money to build their own electric systems.

How farmers built their own utilities

What happened next was remarkable. Across the country, farmers organized. They went door to door signing up members, each of whom paid a small fee. They elected boards. They hired engineers, often with REA help, who designed lines using cheaper, standardized construction. They negotiated rights of way with neighbours. Sometimes they bought wholesale power from the same private utilities that had refused to serve them; sometimes they had to fight for access.

The REA's role was part banker, part engineer and part teacher. It lent money at low interest over long terms, set technical standards that cut construction costs, and sent people into rural communities to show families what electricity could do: electric pumps, refrigerators, irons, milking machines. A family that had never used power needed reasons to buy appliances, because the co-op only worked if members used enough electricity to repay the loans.

The results came fast once the system was in place. By the early 1950s the large majority of American farms were electrified, a near reversal of the situation in the mid-1930s. That transformation changed farm work, women's household labor, rural health, schooling and the economy of small towns.

There is a famous story from the Texas Hill Country. A young congressman named Lyndon Johnson, elected in 1937, found that his district's farms were too sparsely populated to meet the REA's density guidelines. He lobbied Roosevelt personally for an exception, got it, and the Pedernales Electric Cooperative was born. It is a reminder that rural electrification was, from the start, a project that needed political fighters as well as engineers.

What the co-ops are now

The REA no longer exists by that name; its successor is the Rural Utilities Service at the Department of Agriculture, which still lends to rural electric and telecommunications providers. But the co-ops the program created are very much alive. Hundreds of electric cooperatives serve tens of millions of Americans, and their lines cover most of the country's land area, because rural territory is where they were built.

Two features of the co-ops matter for the present. The first is ownership. Co-ops are owned by the people who buy their power, and their boards are elected by members, usually one member, one vote. In principle they are among the most democratic institutions in American economic life. In practice, turnout in many co-op board elections is low, incumbents often run unopposed, and some boards have been criticized for secrecy and for paying themselves generously. Advocates in several Southern states have organized to make co-op elections more open and competitive.

The second is the power mix. Many distribution co-ops buy their electricity from larger cooperatives, called generation and transmission co-ops, that built coal plants in the decades after World War II. As a result, co-op power has often been more coal-heavy than the national average. Some co-ops have moved quickly into wind, solar and storage, especially where those are now the cheapest new power available. Others have locked into long contracts that make change slow and expensive.

The case the utilities made, and why it lost

It is worth giving the private utilities of the 1930s a fair hearing, because their argument was not foolish. They said that farm customers would use too little power to justify the expense of lines, that public lending would crowd out private investment, and that government-backed competitors would have an unfair advantage. They pointed out, correctly, that rural service cost far more per customer than urban service, and they argued that the federal government had no business in the power industry.

They were wrong about the demand. Once farms had power, they used it: for pumping water, milking, refrigeration, lighting barns and running small motors that replaced hours of hand labor. Consumption per farm grew steadily, and co-ops repaid their federal loans at very high rates. The utilities were right that rural service was expensive, but they underestimated how much cheaper careful design could make it and how much value electricity would create once it arrived.

Their warning about competition had a longer life. For decades, private utilities and co-ops fought over territory, wholesale power and federal financing, and some of those fights still flare when a growing suburb spills into a co-op's service area. That rivalry is part of why co-ops tend to be fiercely protective of their independence, including from the federal government that helped create them.

The broader lesson is about what markets do well and what they leave behind. A private utility serving a dense city is an efficient business. A private utility asked to serve a farm at the end of a ten-mile road will usually say no, and it is not being villainous when it does. The question for public policy is what to do about the farm at the end of the road. In 1936, the answer was to lend the farmers the money and let them build it themselves. That answer worked.

The 2022 bet on co-ops, and the argument about it

In 2022, the Inflation Reduction Act included a program aimed directly at these institutions. Called Empowering Rural America, or New ERA, it offered about $9.7 billion in grants and loans to rural electric co-ops to invest in clean energy and to retire or refinance fossil fuel assets. The Agriculture Department announced awards in 2024, and they went to co-ops in states of every political stripe. It was, in a sense, a return to the original idea: public money, delivered patiently, to member-owned utilities, for a purpose the private market was not meeting fast enough.

The program had critics. Some conservatives argued that the federal government should not be pushing utilities to retire working power plants, and that reliability and affordability should come before climate goals. That concern deserves a direct answer. Co-ops serve people who are, on average, less wealthy than urban utility customers and who spend a larger share of income on energy. Any transition that raises their bills or weakens reliability would be a betrayal of the co-ops' founding purpose. The case for New ERA was that, in much of the country, new wind and solar are now among the cheapest sources of electricity, and that helping co-ops escape the costs of aging coal plants protects their members' bills over time. Here is my view: the argument for co-op clean energy is strongest when it is made in exactly those terms, cost and reliability, rather than as a moral demand from people who do not live on the lines.

What has happened to the program and its awards under the current administration is something readers should check rather than assume; federal clean energy programs have been changed and challenged since 2025.

Co-op boards are also where much of this will be decided, often by a few hundred votes. A board that renews a long coal contract, or that signs up for a new solar farm, is making a decision that will shape members' bills for decades. Those choices rarely make the news. They are made in community halls and at annual meetings that often feature a barbecue lunch and a door prize, and they deserve far more attention than they get.

Neighbours on the same line

The rural electrification story is usually told as a New Deal triumph, and it was. But it was also something else: a demonstration that rural Americans, given credit and technical help, would build their own institutions and govern them. The farmers who signed up for the first co-ops were not waiting for the government to run their lives. They wanted a loan and a fair chance.

That spirit is still there. A co-op member in rural Georgia and a co-op member in rural Minnesota may vote very differently in November, but they share an interest in cheap, reliable power and a board that answers to them. Progressives who want to make the clean energy transition work in rural places would do well to start where Norris and Rayburn did: with respect for the people on the end of the line, and a willingness to lend them the tools rather than lecture them.

What you can do

If you live in rural America, there is a good chance you are already an owner of an electric utility and may not know it.

1. Learn your state's power picture. The climate dashboard shows the U.S. power mix and clean power by state, alongside the carbon dioxide record at Mauna Loa and the global temperature record. It is a quick way to see where your state stands.
2. Find local groups working on energy. The organizations directory lists environmental nonprofits by state, including groups that help co-op members understand their utilities and take part in board elections.
3. Talk to your representatives about rural energy programs. Federal support for co-ops passes through Congress, and the representatives tool gives you your members' contact information and recent votes.
4. Follow climate policy as it changes. The climate policy topic page collects coverage on federal and state clean energy programs, including the ones aimed at rural utilities.

And if you are a co-op member, read the notice for the next board election. It is one of the few places in American life where your vote might be one of a few hundred, and where it decides who runs the company that keeps your lights on.