The Co-operative Group’s recent announcement that it is to enter the energy market is a welcome development in an industry where an oligopoly currently rules. There are echoes of the past in this development that are worth highlighting for the purpose of aiding our understanding of how co-operative solutions to industry/society problems originate.
Cast your mind back to 1844 (tricky I know but give it a shot). The industrial revolution had created a new class; the working class and they were exploited by the wealthy factory owners under a capitalist system. 28 weavers in the town of Rochdale banded together and opened a co-operative store to provide locals with unadulterated food. From such humble beginnings rose the co-operative movement as we know it today based on the Rochdale principles. Fast forward to the present day and six energy companies are dominating the market, exploiting residents and businesses using misleading sales techniques. The Co-operative Group, on the behest of its members, has stepped in to offer a mutual solution to a modern problem.
Looking closely, we can find parallels with the Rochdale Pioneers and the conditions that forced them to establish a mutual enterprise. In terms of the energy sector, the market has failed to provide consumers with a fair solution to their energy requirements. Malpractice is common, though not as prominent as in the banking sector. The engaged membership of the Co-operative Group has felt the need to develop a solution to correct the failure of the market. The Rochdale-inspired principles of the Co-operative Group will ensure that profit is not the only motive of the new enterprise, with sustainability and environmental concerns high on the agenda (including sourcing electricity from renewable sources). Coupled with twice-yearly sharing of the profit amongst the members, Co-operative Energy is set to revolutionise the energy market in true Rochdale style.
Luckily Co-operative Energy has a benchmark to aspire to. The National Rural Electric Cooperative Association is the umbrella organisation for over 900 rural electric co-operatives in the US. These energy co-operatives serve 42m people in over 47 states, with assets of $112bn. This remarkable performance has been achieved over 75 years and occurred in vastly different circumstances than those prevalent in the UK but still offers a precedent for a significant role for co-operative energy providers.
It remains to be seen whether this revolution will gain enough traction to unseat the “Big Six”; only time will tell. I’m quietly confident that the Co-operative Energy is primed to spark a new wave of co-operation just in time for the 2012 UN Year of Co-operatives. Watch this space.