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The Value of Electric Cooperatives


Why being a member of a co-op saves you money


There are three main types of electricity providers in the U.S. Investor-owned utilities (IOUs) serve primarily densely populated areas. Municipal-owned utilities also serve densely populated cities from the very large, such as Los Angeles, to the very small like Robersonville, NC. And of course, there are rural electric cooperatives like Lake Region Electric Cooperative that serve less populated parts of the country.


In the utility business, population matters a lot. Since the costs to serve any given area are similar, the more custom- ers that you have allows you to spread the costs among more people to keep rates lower. At least that is the theory. Municipal-owned utilities, which operate in cities and towns, have the greatest density – 48.3 customers per mile of line, generating an average of $113,301 of revenue. IOUs follow with 34 customers per mile of line, while generating average revenues of $75,498. Finally, electric co-ops average 7.4 members (not customers, but members) per mile of line, bringing in an average of $14,938 of rev- enue per mile.


LREC serves 7.9 members per mile generating $1,540 of revenue.


If I were to give this data to any business school in the country and ask (based on this information) what the rates should be for each of the utilities, the answer would likely be that electric co-ops would have a rate 7.5 times greater


Board of Trustees


Gary Cooper ....................................Pres. Bobby Mayfield ........................Vice Pres. Jim Loftin ..............................Secr.-Treas. Jack Teague ..................Asst Secr.-Treas. Randall Shankle ....................... Member Lynn Lamons ............................. Member Scott Manes .............................. Member Staff


Hamid Vahdatipour ..........................CEO Ben McCollum ..................Dir. of Finance Martin Walls ..................Dir. of Operations Stanley Young ................Dir. of Marketing Larry Mattes ...................................Editor Tina Glory-Jordan .......................Attorney


LREC Powerline Press


Office Hours Monday-Friday


than municipal-owned utilities and 5 times higher than IOUs – but that is not the case. Why not? It has to do with the business model. IOUs are owned by outside investors that may or may not be users of the electric utility they own. These com- panies’ stocks are traded on Wall Street, and those investors demand a return on their investment. This drives up the price that their customers pay. Many municipal systems charge rates that generate a “profit” for their cities to help pay for other services. LREC operates on a not-for- profit basis. Of course, we are a business and must gener- ate enough revenue to cover costs (the largest being the purchase of wholesale power). But we don’t have to charge rates to pay outside stockholders. Since our members are our owners, we can 4662301 provide safe, reliable and affordable power to you. That is just another way your co-op brings you value.


Because of higher population densities (more consumers served per mile of line), municipal electric systems and investor-owned utilities receive more revenue per mile of line than electric cooperatives.


Municipal


Consumer served/ revenue per mile of line for different utilities:


Electric Systems: 48.3 / $113,301


Investor-Owned Utilities


34 / $75,498 Member-Owned


Electric Distribution Cooperatives: 7.4 / $14,938


Source: National Rural Electric Cooperative Association, Sept. 2013 Hidden Account Number


Look for your account number hidden in this


8:00 a.m. - 4:30 p.m. Telephone


800-364-LREC or 918-772-2526 Website:


www.lrecok.coop Locations


Hulbert, Wagoner & Tahlequah, OK. Main Office Address P.O. Box 127 Hulbert, OK 74441


issue of the Powerline Press. If you find your number, Lake Region Electric will credit your next bill. To claim your credit, notify LREC’s Hulbert


office by phone or mail during the month of publication. The amount increases by $10 with each


issue your prize goes unclaimed to a maximum of $50. For more information, call 800-364-LREC or 918-772-2526


Cooperative bylaws are available upon


request at Lake Region Electric Cooperative’s office in Hulbert.


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