Consolidating an Electric Cooperative: Strategic Considerations, Benefits, and Challenges

Electric cooperatives across the United States are facing increasing pressure to adapt to a rapidly changing energy landscape. Aging infrastructure, evolving regulatory requirements, the transition toward renewable energy, and rising member expectations are all driving cooperatives to reconsider how they operate. One strategy gaining attention is consolidation—the merging of two or more cooperatives into a single entity. While consolidation is not a new concept, its relevance has grown as cooperatives seek to improve efficiency, strengthen financial stability, and better serve their members. Consolidating is not new to Steele-Waseca Cooperative Electric.  We consolidated twice in the past to become who we are currently and to incorporate the territory we now have.

What Cooperative Consolidation Means for You

Consolidation simply means two or more electric cooperatives joining together to operate as one organization. While the size may change, the cooperative model does not—members still own the co-op, and decisions are made with your best interests in mind.

You may have heard that your electric cooperative is exploring or undergoing a consolidation with another co-op. Understandably, this can raise questions: What does this mean for my service? Will my rates change? Will the cooperative still be local? 

In the last year we have been talking with Goodhue County Cooperative Electric to consider and evaluate the possibility of consolidation or merger.  In addition to analyzing and researching answers to questions from members of both Boards of Directors, we have received analyzes from three separate consultants addressing and encouraging the idea of consolidation or merger. 

Why Are Steele-Waseca Cooperative Electric and Goodhue County Cooperative Electric Considering This?

At its core, consolidation is about achieving economies of scale. We often face higher per-member costs for infrastructure maintenance, administrative operations, and compliance because both SWCE and GCCE, individually, are smaller than the average cooperative in the United States. By combining resources, we will become slightly larger than average, and our cooperatives can spread these costs across a larger membership base, reducing overall expenses per member.

Additionally, consolidation can enhance operational resilience. As a larger organization we will have greater access to capital, more robust emergency response capabilities, and improved bargaining power when procuring equipment or negotiating power supply contracts. This can translate into more reliable service and improved rate stability for members.

Workforce challenges also play a role. Like many cooperatives, both of our cooperatives deal with an aging workforce and sometimes have difficulty attracting specialized talent. Consolidation allows for shared expertise, better training programs, and more sustainable staffing structures.

How Could This Benefit You?

Reliable Service
As a larger, combined cooperative, we will have more crews, equipment, and resources available—especially during storms or outages. That can mean faster restoration times and improved reliability.

Cost Stability
By reducing overhead and operating more efficiently, consolidation helps control costs over time. While no utility can guarantee rates won’t change, a stronger financial position helps keep them as stable as possible.  Our rate consultant has confirmed that a consolidation alone WILL NOT result in a rate increase.

Better Technology and Programs
As a consolidated co-op we will have more capacity to invest in modern grid technology, online tools, and member programs—like energy-saving incentives, rebates, and new billing options.

Stronger Long-Term Planning
With more resources and a broader service area, the combined cooperative can make larger, smarter investments to meet future energy needs.

What Stays the Same?

Even after consolidation, the most important things don’t change:

• You are still a member-owner.
• Your cooperative is still not-for-profit.
• The focus remains on serving your community—not outside shareholders.
• All Board members remain as Board members until retiring off the Board
• Both local offices will remain open for business and a local presence in the community.
• Employee numbers will not be reduced due to consolidation.
• Rates will not increase due to consolidation.
• Capital Credit Allocations and Payments will not be reduced due to consolidation.

Local service is a priority. Offices, service crews, and community involvement remain in place to ensure members continue to receive the support they expect.

What Might Change?

There may be some updates over time, such as:

• A new cooperative name or branding
• Updated billing systems or account numbers
• Changes in board district structure or representation

Governance
Electric cooperatives are member-owned, and governance is a critical concern. Ensuring fair representation for all members in the new structure will be a primary goal. Differences in board districts, voting systems, and bylaws must be reconciled carefully.

Community
Each cooperative has its own identity, culture, and relationship with its community. Your Boards are already working together to merge these cultures through thoughtful change management to maintain trust and morale among employees and members.

Legal Matters
Consolidation requires approval from state regulators, lenders, and members. Legal complexities will be well defined before bringing this matter before both memberships.

Short-Term and Long-Term Costs
While long-term savings are a primary goal, the upfront costs of consolidation—system integration, legal fees, and organizational restructuring have been calculated with the result heavily on the savings side.  In the first 10 years we expect both cooperatives to share in savings in excess of $1,000,000 average per year; less in the first year and more in the later years of a ten-year period.

What can you expect moving forward

1. Transparent Communication
Keeping members, employees, and stakeholders informed throughout the process is essential. Communication, understanding, and transparency is key.

2. Thorough Due Diligence
Financial, operational, and legal analyses have been comprehensive. We have 100% Board approval of both Boards along with objective outside sources. Understanding the strengths of each cooperative ensures informed decision-making.

3. Member Engagement
Because members are owners, their input and approval are critical. Public meetings, surveys, and clear voting processes are what the cooperative family is about.

4. Strategic Alignment
Both cooperatives align very well with goals, values, and long-term strategies.

5. Phased Integration
Planned gradual integration of systems and operations will minimize disruption and allow time to address unforeseen challenges.

Looking Ahead

As the energy sector continues to evolve, consolidation may become an increasingly viable strategy for all electric cooperatives.

When executed thoughtfully, consolidation will strengthen the cooperative model—preserving its core principles of member ownership and community focus while positioning it for future success.

Consolidation is about strengthening your cooperatives so it can continue delivering safe, reliable, and affordable electricity for years to come. While change can feel uncertain, the goal is simple: to serve you better at the best possible price.

If you have questions, each of your cooperatives encourages you to reach out, attend informational meetings, and stay engaged. After all, this is your co-op—and its future is shaped by you.