Board Approves $3,335,742 Refund
Checks to be mailed in AugustCuivre River Electric Cooperative will return more than $3.3 million in capital credits this summer, General Manager/CEO Dan L. Brown announces. This refund, determined by the Board of Directors, maintains the cooperative's long-standing tradition to acknowledge members' ownership interest in their cooperative by returning some of their equity investment from previous years.
"Many of our members today face difficult economic circumstances," says Brown. "If there is ever a time we hope they can benefit economically from getting some of their capital credits back, it's probably now." The majority of current members will receive a check. Active members with a refund amount less than $10 or a past-due balance will receive energy bill credits.
Current refunds will include the final 1/3 of members' capital credits for the year 1990 and 1/4 of their capital credits from the year 2009. Current and former members who received electric service from Cuivre River during these years will be eligible to receive refunds.
Manager of Finance and Accounting Susan Dollins reports that checks for "2009 only" average $35 per member. Checks for members with service in both 1990 and 2009 will average about $84. "For many of these members, the refund is equivalent to a month of free electricity," says Dollins.
Checks will be mailed in early August. Member numbers, refund years and meter locations will be noted.
Capital credits and member control make cooperatives very different from most Missouri utilities. Cuivre River's power truly comes from the people; the cooperative is owned and governed by the people it serves.
What are Capital Credits?
Capital credits represent cooperative members' equity in Cuivre River. The value of each member's equity is based on the volume and value of kilowatt-hours (kwhs) purchased. Credits are allocated to members after the close of the fiscal year if funds remain after all expenses for providing electric services have been met. Prior to refunding the credits, Cuivre River uses member equity in place of commercial loans to help construct the Cooperative's physical plant (poles, wires, transformers, etc.).
The tradition to refund capital credits began for Cuivre River in 1976 when refunds were authorized for the first time. Cuivre River has since established one of the most aggressive equity refund programs among Missouri's 40 electric cooperatives, and has returned more than $58.6 million to members and former members. Recent refunds have averaged nearly $3 million annually.
Things you should know:
1) Your capital credits are reserved for you if you move out of the area. Cuivre River will attempt to reach you when refunds are made.
2) Checks expire after six months. Checks returned in the mail are held while they remain valid. After six months they may be applied to an active account or reissued. Some members and former members choose to donate checks to Operation Round Up.
3) To claim a check that is returned in the mail, or to request a lost check be re-issued, you must provide valid identification.
4) In accordance with Cuivre River Bylaws, if your check is unclaimed after two years, your name is published in two consecutive issues of a local newspaper in the county where you last received Cuivre River service. Checks that remain unclaimed after 60 days of this publication requirement are assigned to the Cooperative.
5) In future years, keep Cuivre River informed of address changes.
6) If you call to establish new service in the future, tell us if you've previously been a member to keep records current.
For more information call Capital Credits Coordinator Pam Reale, 800.392.3709, ext. 214.
Capital Credit FAQs
Why give refunds when rates are under pressure?
Although there was no rate increase in 2010, future increases may be unavoidable, regardless of capital credit refunds. Recent rate increases (2008, 2009) have been due to rising wholesale costs, which account for nearly 70% of our expenses, and the lion's share of your electric bill.
When capital credits are refunded, member capital — funds essentially borrowed from members in previous years — is replaced with capital borrowed from other sources. Our member equity level, interest rates and cash flow are key criteria.
The Board of Directors, in authorizing capital refunds, underscores a key difference between cooperatives and other types of businesses. As a member you own the cooperative; the equity belongs to you. Your economic participation is a core cooperative principle.
Will there always be refunds?
No refunds were made during the first 35 years of Cuivre River's history. In the early 1970s, no capital remained at the end of the year. Some years the Cooperative has not been in a financial position to refund the capital.
Refunds may not always be possible. Your directors evaluate equity level and financial strength each year to determine if capital refunds can be made. Many cooperatives do not refund member capital.