Operating Income Comparison of Investor-owned vs. Cooperative Electric Utilities

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The above series of charts compare the operating income of investor-owned electric utilities (IOUs) with cooperative borrower utilities (co-op) from 1998-2009.  Keep in mind, IOUs are for-profit entities while cooperative borrowers are not-for-profit.

One central point of these charts is that investor-owned utilities on average make 2 - 4% more on each dollar of revenue than cooperative borrower utilities.  In some years like 1999, IOUs exceeded the range making 4.6% operating income for each revenue dollar, while in 2000 net operating income was near zero.  Chart 1 shows net operating income for both segments of the industry.  Operating income is usually a higher percentage of total revenue for IOUs than for cooperative because of their profit orientation. Another central point of the charts is the downtrend in operating profits.  IOU profitability bottomed in 2000, when viewed as a percent of total revenue.  Cooperative borrower profitability bottomed in 2005.  After a leveling period, both sectors have seen an upturn in profitibility in 2009. Chart 2 provides a graphic of the difference of investor-owned utilities operating profit over cooperative borrowers.  When profits are expressed in term of total revenue, IOUs run 2-4% above their non-profit competitors.  However, when compared to each other directly, the difference are more striking. Chart 3 expresses the increased profitability of IOUs over cooperative borrowers using the latter as the basis, not total revenues.  For example, if operating income for IOUs and Co-ops were 11.5 and 9.1 of total revenue respectivelly in 2009, then the difference of 2.4% means that IOUs made 2.4 cents more for each dollar of sales than co-ops.  Expressed another way, since 2.4/9.1 equals 26%, co-ops could argue that IOUs made 26% more on each dollar of revenue in 2009.