Moultonborough Historical Society
A Brief History of the New Hampshire Electric Cooperative
|As compiled and written by Seth Wheeler, NHEC|
It was Christmas Day 1940
when the lights came on at Andrew Felker's home in Meredith Center. So
impressed was Mr. Felker, a former New Hampshire Commissioner of
Agriculture, that he took pen to paper under the glow of his new electric
light. "Life Begins At Seventy," he wrote, and concluded with
the following verse,
Fifty years ago it was hard to overstate the excitement and joy that accompanied the arrival of electricity to rural New Hampshire. One member of the newly formed electric cooperative related how she and her family felt when the lights were finally turned on.
Another woman - an elderly lady from Sandwich - never believed that electricity would come to her doorstep. But when it came time to throw the final switch, she pulled her rocking chair right up under the light fixture hanging from the ceiling. When the light came on, she said, "I'm going to sit right here and rock all night and look at that light."
These are the success stories, the happy endings to the long and sometimes turbulent tales of rural electrification in New Hampshire and the founding of the New Hampshire Electric Cooperative. The Co-op was founded in 1939, but its roots can be traced back to the early years of the 20th century when electricity first became a commodity.
In those early days, electricity was a luxury for city dwellers or those willing to create it themselves using water power or noisy, unreliable gasoline generators. Power generated at a central plant and distributed over a local network of wires was confined to large population centers and used almost entirely for illumination. It was not until about 1915 that engineers were able to transmit electrical energy for at least 70 miles with enough juice to power small motors. It was then that power for all farmers became a theoretical possibility, but many years would pass before it became a reality.
From an economic standpoint, the private utility companies that dotted the map in far greater numbers than today had no incentive to extend service far into the rural backwaters of America. Turning a profit in those days meant serving only those areas where customer density was greatest. If you were a farmer living five miles away from the nearest electric line, you were obliged to pay the local utility $2,000 to $3,000 per mile to extend service to your property. Even then, many rural customers were charged higher rates than their city cousins. To the average farmer living hand-to-mouth, the exorbitant cost of electrical service all but doomed he and his family to the drudgery of hand pumping, kerosene lamps and the wood stove range. More importantly, though, it fueled the growing resentment and impatience that would lead to the creation of the first rural electric cooperatives.
In 1933, with the country in the grip of the great Depression, a landmark study was published by Morris Cooke, a Pennsylvania man who would later go on to become the first administrator of the Rural Electrification Administration. In his study, Mr. Cooke concluded that the actual cost of distributing electricity in rural regions was $300 to $1,500 cheaper per mile than the utilities had been charging. He also concluded that, given the reluctance of the local utilities to bring service to the countryside, only the intervention of the federal government would ensure the widespread electrification of America's rural areas.
This was music to the ears of President Franklin Delano Roosevelt. Faced with the devastating effects of the Depression, FDR was anxious to spur economic growth in any way possible. Against this backdrop, the Rural Electrification Administration was created by Executive Order of the President as a lending agency with the authority to set its own rules and regulations. The freedom to direct its own affairs was crucial to the success of the REA, which would need all the agility it could muster to do battle with the private utilities - all of whom were up in arms over what they saw as a federal intrusion into their marketplace.
A quick look at the results of another survey from the same time underscored the need for the REA and the daunting task it faced in lighting up the countryside. The Edison Electric Institute survey found that fewer than 11 of every 100 U.S. farms had electricity in 1934. Surprisingly, however, the survey found that 63.5 percent of New Hampshire farms were served with electricity - the highest figure for any state in the country.
Though New Hampshire's rural electrification rate was admirable, its rate structure was not. New Hampshire residents paid the second-highest electric rates in the country - 100% higher than the composite rate average of areas like Washington D.C., Cincinnati, Montreal and Tacoma, Washington. Also, the outlook for those 13,000 families living outside the electric lines in New Hampshire was not good. The survey found that only 132 of a proposed 1,500 line extensions would provide sufficient revenue to make them attractive candidates for construction by the private utilities.
Until the founding of the New Hampshire Electric Co-op in 1939, rural customers who wanted electricity had to commit to the so-called 5-Year Plan. Under this plan, the customers on a new extension had to guarantee monthly revenue for at least five years that was equal to one-sixtieth of the cost of building and equipping the line.
The plight of New Hampshire residents living outside the existing electrical lines did not escape the attention of the powerful State Grange organization. Long an advocate of the New Hampshire farmer, the State Grange, under the dynamic leadership of a 32-year-old Meredith resident named William Neal, made rural electrification its top priority following the creation of the REA. At its 1938 annual meeting, the Grange passed a resolution inviting representatives of the REA to visit New Hampshire to discuss ways of making electricity available to more rural residents in the state. The REA was quick to accept the invitation and dispatched a representative from Washington D.C. to meet with Grange officials in New Hampshire.
What the REA man found in New Hampshire was a state not ready yet to host its first electric cooperative. The most significant hurdle was a legal one - an obscure detail in New Hampshire's cooperative marketing law prevented the electric co-op from forming. State Grange Master Neal, also a State Representative, spearheaded an amendment to the law, which passed in June 1939. The very next month, the New Hampshire Electric Cooperative was founded.
The young Co-op hit the ground running. A 9-man Board of Directors quickly hired Neal as their first President, who in turn hired Plymouth resident Leon Huntress as Superintendent of the Co-op. While Huntress drew up plans for the Co-op's first membership drive, President Neal was submitting his application to the REA seeking an initial allotment of $400,000 for the construction of 111 miles of line in rural Sullivan County. The federal money - allotted as a 25-year loan - was received in October 1939. Not only was the Co-op actively recruiting rural members, the prices they quoted to install electric service were unbeatable - $2 for home wiring (80% of which could be financed over five years.) And once a homeowner was wired for electricity, the REA allowed for very generous borrowing terms to purchase electrical appliances. Co-op members could borrow up to 95% of the cost of appliances and equipment and pay the debt back on their monthly electric bill at 6% interest.
The Co-op was gaining momentum now. Everyone in the state had heard of the new electric company that aimed to bring power to every family who wanted it in New Hampshire. The Co-op's progress had not gone unnoticed by the numerous private utilities in the state either, and they let it be known - through methods both above and below board - that they didn't plan to stand by while a federally-bankrolled cooperative made inroads in its back yard.
The private and investor-owned utilities responded to the challenge by trying to beat the Co-op to the punch. In a 1940 speech to the Laconia Kiwanis Club, Mr. Neal recounted the tale of one rural resident who was unable to get electric service from Public Service of New Hampshire because the price was too high. Once the New Hampshire legislature cleared the way for the creation of the Co-op, however, PSNH immediately cut the rate in half in an effort to sign the man up.
More common was what Neal described as the utilities' efforts to "take the heart out of the Co-op." Neal pointed to at least four different towns where utilities extended lines to areas already slated for inclusion in the Co-op, oftentimes making it economically unfeasible for the Co-op to extend lines. The town of Stoddard was a classic case. The very month that the Co-op announced plans to extend service to Stoddard, Public Service of New Hampshire hastily erected a six-mile line that served Stoddard center - the most densely populated area of town.
Leon Huntress tells of a Sunday afternoon when he received a phone call reporting that a work crew from PSNH was setting poles in the area where the Co-op had started to install service. Mr. Huntress, noting that the crew was already stringing wires on the poles, brought an abrupt halt to the work when he cited the State law requiring the signed consent of town selectmen to carry an electric line across a highway. And it so happened that two of the town selectmen were Co-op members and they were not inclined to give their consent. In New Durham, where residents had unsuccessfully petitioned the White Mountain Power Company for years to extend electric service to them, Co-op employees had been busy signing up potential members. One weekend, a large work crew appeared from White Mountain and hastily built a complete line from the center of town to the shores of Merrymeeting Lake. This came as a great shock to the Cooperative, which took the case to the NH Public Service Commission. Ultimately, White Mountain Power was obliged to take down the hastily built wire.
At a co-op switch-throwing ceremony in neighboring Vermont in 1940, Governor George Aiken referred to the bad blood with the utilities in his comments:
Certainly no one needed to expound the virtues of the Co-op to the residents of Lempster and surrounding Sullivan County. On a cold and windy December 4 in 1939, more than 300 people marched down Lempster Street to the field of Fred Barton - a dairyman, Co-op vice president and a true champion of rural electrification. The Co-op was setting its first utility pole in Mr. Barton's field and history was in the air. The Manchester Union described the scene:
With the turn of a shovel, the Co-op entered a period of intense activity. REA money was flowing in, rural members were signing up in droves and engineers were laying out rights of way to carry up to 1,000 miles of new electrical line across all 10 New Hampshire counties. At the peak of construction activity in early 1940, there were more than 300 men engineering and building Co-op lines with each crew making progress at a rate of three miles per day. An additional 35 Co-op employees were criss-crossing the state signing up new members and securing rights of way.
At its first annual meeting in March 1940, the Co-op boasted 1,329 members, all recruited in a span of eight months. That same month, a simple ceremony at a sub-station in Sunapee marked the throwing of the switch that brought power to the first 46 miles of Co-op lines serving 150 families.
By the end of 1940, the Co-op had plans and financing set for a 1,083-mile extension, which would wend its way east from Lempster to Center Harbor into the heart of territory served largely by White Mountain Power Company. The Co-op would go on to purchase White Mountain Power in 1948. Unfortunately for the Co-op, however, the intervening years would not be easy ones.
About the only thing that could slow the Co-op's momentum in the early 1940's was a world war, and that's just what happened. Wartime rationing sent the cost of electrical equipment soaring, if it was available at all. Manpower was in short supply and the pace of construction slowed accordingly. The Allied victory in 1945, however, signaled an end to the uneasy truce between the Co-op and New Hampshire's private utilities. With wartime shortages of equipment easing, the utilities raced to sign up new members. Many utilities had responded to the Co-op challenge by lowering rates below those charged by the REA to attract more rural customers. Not surprisingly, the strategy worked and the Co-op, already over-extended by a number of costly construction projects, found itself sliding into debt to the REA.
The Co-op's post-war fiscal woes were particularly frustrating given the favorable treatment the company received from the New Hampshire Legislature and state utility regulators. The Co-op, unlike the private and investor-owned utilities, was not required to seek "franchise rights" to serve members in its territory. It was free to extend its lines wherever there was a demand, regardless of prior franchise guarantees to private companies. And a state law passed in 1945 made it illegal for another power company to serve residents living within 1,000 feet of an existing Co-op line. Under pressure from their competition and from REA administrators in Washington, Co-op officials could at least take comfort in the fact that the Co-op was accomplishing its mission to bring electricity to rural New Hampshire residents, most of whom would not have the service were it not for the Co-op. But it would be one of the company's top leaders that would bring the Co-op to its lowest ebb.
It was a Fall day in 1944 when George Duncan, the Chairman of the co-op Board of Directors, sat down with Superintendent Huntress to discuss a troubling discrepancy in the company's accounting books. By the end of the meeting, Huntress had confessed to the embezzlement of some $4,000 in Co-op funds. When Duncan offered to personally reimburse the Co-op on behalf of Huntress, the Superintendent acknowledged the sum of his bad deeds was closer to $8,000. Following a lengthy internal investigation, it was eventually determined that Leon Huntress had embezzled nearly $15,000 from the Co-op over his six years of employment. To forestall criminal charges against him, Huntress agreed to resign and make restitution to the Co-op. Not party to these difficult times was Bill Neal, the Co-op founder who a year earlier had left the Co-op to become the Acting Administrator of the REA in its new St. Louis headquarters. Neal would serve as the REA administrator before he died tragically in a 1949 automobile accident.
Befitting a company born of a federal agency, it was the intervention of the REA in the affairs of the Co-op that would eventually put the company back on track. In June 1945, the Co-op was $180,000 in arrears on its payments to the REA and reeling from the scandalous departure of Leon Huntress. The New Hampshire Co-op's troubles made great fodder for opponents of the REA, many of whom objected to Bill Neal's leadership. In an angry address to the Senate in 1945, Minnesota Senator Henrik Shipstead accused Neal of presiding over "the worst managed of all the 813 REA cooperatives."
Into this fray stepped the REA with a plan to directly manage the New Hampshire Co-op until it achieved both financial and managerial stability. Thus started the gradual recovery of the Co-op, a process that would be completed by the 1948 purchase of White Mountain Power. The addition of White Mountain's 7,500 customers in 28 New Hampshire towns gave the Co-op the critical mass it needed to continue its mission. Today the Co-op serves more than 70,000 members in 115 towns and cities.