This page contains a Flash digital edition of a book.
December 2015


SWRE Capital Credit Checks to be Mailed in December


I am pleased to announce that the SWRE Board of Trustees voted in the October board meeting to retire over $250,000 of capital credits. I would like to explain what this means to our members who may not be familiar with the theory of patronage capital and cooperatives. Each year after the cooperative pays all of its bills and expenses, there may or may not be money left over for system improvements and maintenance. If


there are


additional dollars left over, this is called a margin. That margin becomes “patronage capital” or, put another way, it is the amount of investment into the capital infrastructure of the cooperative system.


Patronage allocation notices were mailed in September detailing the amount of capital allocation made on the behalf of each member. This allocation is not cash, it is not credit toward a bill, nor is it something that a member owes. The allocation is notifying each member the amount of capital credits used for system improvement this year that will be retired sometime in the future.


The total amount of patronage capital that has been retained over the years is called the “equity” of the cooperative. Patronage capital is not money that is left as savings or excess fund balances. It is used to improve the electrical system by


replacing poles, wires, equipment, transformers, etc., as well as repairing storm damaged facilities, or facilities or equipment that has just “worn out.”


The sum total of all of the capital contributed by members is the “equity “of the cooperative. The poles, wires, and transformers that you see driving down the road are the equity or collateral of our cooperative. Government and private lending institutions that we depend on for operating loans require certain levels of equity ranges for co-ops like SWRE, and SWRE has been fortunate in being able to maintain those equity ranges required by lenders throughout our financial history. The balance of equity versus short-term and long-term debt is how a cooperative operates. It is something like a


perpetual


mortgage that the Rural Utilities Service, private lending banks, and several layers of auditors monitor very, very closely! This is how a co-op works – if we had to pay cash for everything the co-op built to improve or maintain the system, our rates would have to be 10 to 15 times higher and we would not be able to replace the system for months or years if a big storm went through our system! The key is to balance equity, long term debt, and expenses to keep power costs as low as possible, pay back capital credits when possible, and still maintain the


by Mike R. Hagy


fiscal viability of our cooperative. With that being said, when the Board determines that the cooperative can repay a portion of the “patronage capital” or “capital credits” without jeopardizing that fiscal balance necessary for the cooperative to operate, the Board decides to pay or retire a specific portion of those capital credits.


The capital credit checks are paid according to the amount of kilowatt hours of electricity used during the specific years retired, and this year a portion of the $250,000 will


also be paid to


members for their usage within the last year as well. This combination method of returning capital credits will mean that nearly all of our members will receive a check in December; however, we will not issue a check for any amount less than $5 dollars. Barring storms or catastrophic events for the cooperative, the Board


has adopted a very


aggressive strategy to substantially increase the amount of the capital credits paid to our members over the next few years. As we look forward to a new year, we want to continue to serve our members through our vision


of safety, service, and


satisfaction – one member at a time!


Merry Christmas and May God bless each of you!


Capitol Credit Checks will be mailed in early December and will be based on co-op members’ electricity usage in 1975 and 2015.


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