In a rare transaction for the cooperative power industry, three lawyers at Autry, Horton & Cole have crafted an energy purchase and sale agreement valued at more than $500 million between 15 of Georgia’s electric cooperatives and an arm of Baltimore-based power giant Constellation Energy, Inc.

The deal allows the coops to avoid the effort and expense of building a power plant to serve their customers’ growing needs and instead to purchase electricity at competitive rates from Constellation Energy Commodities Group between 2011 and 2015.

“This is an unusual transaction for cooperatives in many ways,” said Kenneth T. Horton, one of the partners on the deal. “Most cooperatives in the country … typically have members commit to buying all their energy from a single entity.”

That entity, he said, would build the power plants and handle transmission, systems and the supply of electricity to customers. But Georgia, he said, “is on the cutting edge of the cooperative form.”

In 1997, Oglethorpe Power, which supplies power to more than 35 Georgia cooperatives, became the first electric utility in the country to split into three independent companies, one for generation, one for transmission and one for systems operations such as scheduling, power dispatch and energy monitoring. At the time, its CEO said the company disaggregated in anticipation of federal deregulation in the power industry.

The 1997 restructuring also was unique, said Horton, because the coops were permitted to buy power from sources other than the Oglethorpe entities, giving them more flexibility than coops in other states.

“There are not a lot of other cooperative groups outside of Georgia that do these types of transactions that frequently,” Horton added. “The most complicated, sophisticated and interesting system in the country for cooperatives is in the state of Georgia.”

Georgia, in some ways, can take credit for the genesis of electric cooperatives. Autry said that when President Franklin Delano Roosevelt came to Warm Springs, Ga., for polio treatments, he became curious about the high cost of power in the area. He learned that prices were high because it was so expensive to get electricity to rural areas.

That realization eventually led to the Rural Electrification Act of 1936, and Georgia’s current roster of 42 electric cooperatives were created under that act in the 1930s and 1940s as a means of providing reliable, affordable power to farmers.

Those coops, according to Autry, now provide power to some 70 percent of Georgia’s land area, though a considerably lesser percentage of its inhabitants because their service areas are sparsely populated.

Coops essentially function as monopolies, said partner Roland F. Hall, who has authored a book on cooperatives, because the state’s Public Service Commission and the Georgia Territorial Act assign service areas to utilities.

That monopoly structure may make coops an attractive investment structure in this era of economic uncertainty. Horton said bids for the deal were solicited from a number of power marketers, including some financial institutions. He explained that since deregulation, entities such as Goldman Sachs have entered the power arena because they recognized the potential profit in the transactions.

Constellation, represented by senior in-house counsel David Hannan, produced the winning bid.

The 15 coops that Autry, Horton & Cole represent are or are becoming members of the Georgia Energy Cooperative, or GEC, which Autry describes as “a cooperative made up of cooperatives.” Under the terms of the deal, GEC members can benefit from an economy of scale in purchasing power and selling any excess. The anticipated value of the electricity to be bought and sold during the deal’s four-year lifespan, Horton said, is in excess of $500 million.

He said the deal took about a year to put together and involved negotiations with multiple parties, as well as contract drafting.

In a statement, GEC President and CEO Glenn Loomer said Autry, Horton & Cole had represented the coop in all of its power supply deals since its formation in 2001. “After months of analysis and negotiation,” he said, “our members selected the transaction with Constellation as the most economical way to provide all their energy needs through the middle of the next decade. … This was a major deal.”