Board Approves $3.9 Million Refund
Checks To Be Mailed Today
Troy, Missouri. July 29th.
Cuivre River Electric Cooperative will return nearly $4 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 refunding a portion of their equity investment. This decision is made on a year-by-year basis.
Most current members will receive a check. The exception: active members with refunds less than $10 or a 60-day past-due balance. They will receive their refunds as energy bill credits.
The current refund includes 50% of members' equity for 1991 and 20% of their 2010 equity. All members who received Cuivre River electric service during these years will be eligible.
Manager of Finance and Accounting Susan Dollins reports that the average check for 2010 is $37. The average for members with service in both 1991 and 2010 is about $100. "For long-term members, the refund is almost one month of free electricity," says Dollins.
Checks will be mailed in early August. Member account 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 members' equity ownership in Cuivre River. Credits are allocated after the close of the fiscal year, if funds remain after all expenses for providing electric services have been met. The value of each member's equity is based on the quantity and cost of kilowatt-hours (kwhs) purchased.
Prior to refunding member capital, Cuivre River uses it in place of commercial loans to construct the Cooperative's physical plant (poles, wires, transformers, etc.). This holds down interest expenses that would be passed on to members.
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 $62.5 million to members and former members. Recent refunds have averaged more than $3 million annually.
Things You Should Know:
1) Your capital credits are reserved for you even if you discontinue Cuivre River service. Cuivre River will attempt to reach you when refunds are made if a current address is on file.
2) Checks expire after six months. Checks returned by mail are held while they remain valid. After six months they are applied as bill credits to their respective active accounts. By request, they may also be donated to Operation Round Up to help families in need.
3) To claim a check returned by mail, or request re-issue of a lost check, 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 unclaimed after 60 days of this publication requirement are assigned to the Cooperative.
5) 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
Q. Why give refunds instead of reducing rates?
A. Although there was no rate increase in 2011, future increases will be unavoidable, regardless of capital credit refunds.
We focus on maintaining stable rates that are adequate to meet expenses. Wholesale costs account for nearly 70% of those expenses, and the lion's share of your electric bill.
As each year begins we anticipate as best we can what wholesale costs may be, based on projected energy demand and use. Both can fluctuate widely with the economy and the weather.
Our member equity level, interest rates and cash flow are key criteria in determining if issuing refunds is a financially responsible decision.
Q. Is the money in the bank until it's refunded?
A. When capital credits are refunded, member capital — money which is essentially borrowed from members — is replaced with money borrowed from other sources. It's not in the bank; it's invested in the infrastructure that provides your service.
When your Directors authorize capital refunds, they underscore 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.
Q. Will there always be refunds?
A. No refunds were made during the early years of our history, when no capital remained at the end of the year. Also, some years the Cooperative may not be in the financial position to refund capital.