Up until the late 1950s, most investor-owned utility (IOU) executives dismissed co-ops as amateur operations. What business did farmers have selling electricity?
They believed that after these amateurs exhausted themselves doing what was obviously out of their depth, they’d be more than happy to sell out at fire-sale prices.
In the spring of 1948, Appalachian Power Company executives thought they saw this dynamic at work in the southern Virginia mountain town of New Castle, home base of Craig- Botetourt Electric Cooperative, a small distribution system plagued by power supply, voltage, and line construction problems.
From its headquarters in Charleston, W.Va., Appalachian Power sent a squad of smooth-talking men in “white shirts” to New Castle to meet with co-op employees and board members, speak at community meetings, distribute pamphlets, and collect proxy votes for a slate of pro-sale board candidates.
The white shirts promised board members a way to wash their hands of the co-op’s troubles, promised employees higher salaries and better benefits, and promised members a more professionally managed utility and lower rates.
But they badly underestimated how much fight these farmers and mountain people had in them, especially when the enemy was a big corporation with designs on a community institution they had built from scratch and nurtured for a dozen years.
Craig-Botetourt Electric General Manager Clay Huffman asked for help from the Rural Electrification Administration (REA), NRECA, and the Virginia statewide. Two REA staff members temporarily moved to New Castle that spring, and NRECA made the co-op the focal point of its national campaign against predatory IOUs.
In mid-April, Huffman attended a statewide meeting in nearby Roanoke, where he filled in his colleagues at other Virginia co-ops on Appalachian Power and the co-op’s construction problems. Before the end of the month, 50 linemen and eight line trucks from five co-ops arrived in New Castle with the goal of connecting 201 new co-op members by Craig-Botetourt Electric’s May 22 annual meeting. This was the stalled “L” section of line, a hotbed of pro-Appalachian Power sentiment.
On May 6, a story appeared in local newspapers. The co-op publicly laid out plans to obtain additional funds from REA to accelerate its line construction program and to purchase a number of small generating plants that would solve its power supply and voltage problems.
The next day, M.C. Funk, vice president and general manager of Appalachian Power, made a formal purchase offer to Craig-Botetourt Electric’s board of directors. The IOU would pay off the co-op’s REA loans, pay the members for their equity, and pay for the new generating plants. This came to $620,090, far below the real value of the distribution system.
Then on May 12, The Roanoke Times published an advertisement signed by Funk, promising lower rates and extolling the virtues of the IOU. He instructed co-op members to vote against going deeper into debt with REA and to elect a pro-Appalachian Power board of directors.
Most significant, Funk appealed to members to sell out. It was in their best interest to do so, he said.
The same information was mailed to every co-op consumer, not once but three times before the annual meeting. If that wasn’t enough, Appalachian Power held more than 25 meetings with consumers.
According to the August 1948 issue of RE Magazine, the co-op was depicted as a broken-down company, and some members came away from the meetings with the impression that they were personally responsible for Craig-Botetourt Electric’s REA debt, which wasn’t true.
Appalachian Power counted on winning at the ballot box in the little red brick village school where the annual meeting was held. The co-op, untypically, allowed unlimited proxy voting, including votes of non-members, and the IOU men had collected hundreds of them.
But when the last ballot had been counted at 4:15 the following morning, a Sunday, eight board candidates who had declared their uncompromising opposition to selling the co-op had been elected.
REA Deputy Administrator William J. Neal and NRECA General Manager Clyde Ellis had made strong impressions on the co-op members in the audience. Neal appealed to their common sense when he passed out government documents proving Appalachian Power was lowballing the co-op.
And Ellis appealed to their sense of common cause when he said: “The word of what you do here will go out in 24 hours to millions of farm families throughout America and to the Congress. I pray that you, in your wisdom, will consider not only your own welfare, but that of your neighbors and fellow farmers everywhere. Don’t surrender!”