This page contains a Flash digital edition of a book.
CO - OP LIVI NG


Third Cooperative Principle: Member Economic Participation


Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership.


By Anna Politano A


s member-owners, consumers of most electric cooperatives enjoy the privi- lege of receiving capital credits—a portion of the cooperative’s surplus rev- enue. The cooperative’s Board of Trustees— a member-elected, regulatory body—along with the cooperative’s management, may choose to allocate a portion of the surplus revenue (if any) back to the members based on their individual consumption of electric- ity. In addition, the co-op board may also choose to allocate surpluses to develop the cooperative, set up reserves, and support other activities benefi tting the membership. Because electric cooperatives are non-profi t organizations, they provide electricity to their members at cost. After revenues cover the coop- erative’s expenses, the local board determines how any net margins are to be allocated. At Alfalfa Electric Cooperative (AEC), headquar- tered in Cherokee, Okla., General Manager Max Ott says their cooperative is pleased to retire capi- tal credits every year.


“We started retiring capital credits in 1976 and have paid every year since then,” says Ott, who started as an engineer at AEC in 1975 and has been its general manager for 27 years. “We present capi- tal credits checks every year at our Annual Meeting. It is also an incentive to motivate our members to attend the meeting. Members who cannot attend the meeting are welcome to come by the offi ce to request their check.”


There are several methods of returning capital


Editor’s Note: This is the third story in a series highlighting the Seven Cooperative Principles as a celebration of the International Year of Cooperatives.


Members of Alfalfa Electric Cooperative (AEC) pick up their Capital Credits check at the co-op’s 76th Annual Meeting.


If viewing our digital edition, click here for a video on the impact cooperatives make in


their communities. Access our digital edition at www.ok-living.coop


credits to the co-op membership. Every year AEC retires 5 percent of its unretired allocated capital credits by using a blended method. One method is known as First In, First Out (FIFO), which returns oldest investments fi rst, without regard to the level of investment. The cooperative selects a period of time that will serve as a rotation cycle for the FIFO method. In Alfalfa’s example, 70 percent of their approved retirement amount is paid out every year based on a rotation cycle of 20 years. According to Accounting Director Christy Schanbacher, by this year’s Annual Meeting AEC had closed out the year of 1986 and started retiring capital credits from 1987. The remaining 30 percent of the capital credits retirement is paid out to the membership


based on the Last in, First Out (LIFO) method, which returns capital in proportion to the mem- bership’s consumption of electricity from the last year. By using these two methods, both older and newer members enjoy the benefi t of receiving capital back. “It’s important that our co-op is rotating its capital,” Ott says. “There are some members who started their membership in 1937 and are no longer here. By rotating capital, we keep our membership current, supported by the ones who own the co-op now. They’re not living off the in- vestment of members who are no longer here.” Longtime AEC member, Jim Hadwiger, con-


fi rms that receiving his capital credits check every year brings with it a satisfactory feeling that he is indeed a member of his cooperative. “The capital credits check lets people know they actually own an interest in the cooperative, and it also keeps the co-op on its toes,” Hadwiger says. “I look forward to receiving my check every year.” To fi nd out more about the cooperative principle of Member Economic Participation, contact your local electric cooperative. OL


OL


A diverse crowd attended AEC’s Annual Meeting at the Cherokee High School Gymnasium on March 30.


Photos by Linda Warner/AEC At the Capitol, for YOU


Several managers, directors, and employees of rural electric cooperatives in Oklahoma attended the National Rural Electric Cooperative Association’s Grassroots Summit held in Washington, D.C. in late April. Electric co-op leaders from across America spent time on Capitol Hill talk- ing to their congressional delegations and congressional staff about legislative issues affecting electric cooperatives and their member-owners. Pictured from left to right are: Scott Williams (Western Farmers); Jimmy Taylor (Northfork Electric); Gary McCune (Central Rural Electric); Dwight Luther (East Central Electric); Gary Roulet (Western Farmers); Tim Smith (East Central Electric); Ron Cunningham (Western Farmers); Brian Hobbs (Western Farmers); Scott Copeland (Northfork Electric); Kenny Knowles (Northwestern Electric); Terry Matlock (Choctaw Electric); Chris Meyers (Oklahoma Association of Electric Cooperatives).


Photo by Stacy Howeth/OAEC JUNE 2012 5


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84  |  Page 85  |  Page 86  |  Page 87  |  Page 88  |  Page 89  |  Page 90  |  Page 91  |  Page 92  |  Page 93  |  Page 94  |  Page 95  |  Page 96  |  Page 97  |  Page 98  |  Page 99  |  Page 100  |  Page 101  |  Page 102  |  Page 103  |  Page 104  |  Page 105  |  Page 106  |  Page 107  |  Page 108  |  Page 109  |  Page 110  |  Page 111  |  Page 112  |  Page 113  |  Page 114  |  Page 115  |  Page 116  |  Page 117  |  Page 118  |  Page 119  |  Page 120  |  Page 121  |  Page 122  |  Page 123  |  Page 124  |  Page 125  |  Page 126  |  Page 127  |  Page 128  |  Page 129  |  Page 130  |  Page 131  |  Page 132  |  Page 133  |  Page 134  |  Page 135  |  Page 136  |  Page 137  |  Page 138  |  Page 139  |  Page 140  |  Page 141  |  Page 142  |  Page 143  |  Page 144  |  Page 145  |  Page 146  |  Page 147  |  Page 148  |  Page 149  |  Page 150  |  Page 151  |  Page 152