CEO’s Message — December 2020
Capital Credit Checks on the Way
No matter how many times I’ve been disappointed by the contents of my mailbox, I still open it hoping to find something good inside. If your experience is similar to mine, most days it’s stuffed with bills or advertising—or both. If this sounds all too familiar, I’ve got good news for you!
In November and December, Wells Rural Electric Co. (WREC) will mail approximately 7,089 capital credit checks totaling $687,498. Depending on how long you have been a member—and how much electricity you used—you may find a check in your mailbox soon. Members with active accounts between 1989 and 2018 could receive a check before Christmas.
Electric cooperatives are the only electric utilities where every member is part-owner of the business. That makes us unlike any other form of electric utility. Municipal utilities and power districts are government entities, while stockholders own investor-owned utilities. Only electric cooperatives return margins—similar to profits—to the members who used electricity.
Since WREC is a member-owned electric cooperative, we work hard to serve our members by providing safe, reliable, affordable, and carbon-free electricity. Because members are owners, when revenues exceed the cost of doing business, those margins are returned to the members as capital credits.
Of course, just like any other business decision, there is a process for allocating and refunding capital credits:
- An independent audit ensures costs and revenues are recorded accurately.
- Margins are calculated by subtracting costs from revenues for the year.
- Margins are prorated and assigned to each account according to the member’s total for the year.
- Your board of directors determines that your cooperative has the financial strength to return capital credits.
To meet our financial obligations—such as long and short-term debt—replace aging infrastructure and build new power lines, to name just a few, the cooperative must retain capital for a period of time. The retention of capital helps us maintain the right balance between providing for the future and keeping rates low.
By holding onto margins before returning capital credits, WREC builds equity. This enables your cooperative to secure low-cost loans, which helps keep rates down, as we maintain and improve our power lines, substations, and facilities.
Returning capital credits is just one more way WREC is looking out for you. If you don’t receive a capital credit check by mid-December but believe you should have, please contact your local office.
Don’t forget to check your mailbox.
Clay R. Fitch
Chief Executive Officer