September 2015

Capital Credits

At SEMO Electric Cooperative, our goal is to provide safe, reliable and low-cost electric service to our members. As part of that commitment, we must be good stewards of the financial resources we manage on behalf of our members.

Among the resources that we manage are the funds paid to the cooperative by members through their monthly electric bill. Those funds are also called capital. The majority of these funds are used to pay for electricity purchased from our wholesale cooperative supplier – M&A Electric Power Cooperative. A portion of your bill pays for salaries and operating expenses of the cooperative. A portion of each monthly bill pays for the network of lines, transformers and substations.

Most electric companies use their profits to pay Wall Street investors. SEMO Electric is different because we are a member-owned electric cooperative and a not-for-profit business. Technically, every customer is a member and every member owns a share of the network of lines and poles, based on the number of years someone has been a member. This is also known as the member’s equity share or their capital credit.

Explaining capital credits is complicated. A capital credit is not cash on hand, but rather equity in the system. It does, however, show up on our financial filings, which further confuses many people. Based on the value of our system, the cooperative is able to borrow money to grow our system to serve the needs of new members or to restore the system after thunderstorms.

Each year SEMO Electric’s Board of Directors make a decision as to whether the cooperative will retire capital credits based on the financial condition of the cooperative.  During some years, the co-op may experience lower growth in the number of new accounts, or co-op expenses may be lower than expected because of fewer severe storms or system repairs. The Board also evaluates the method, basis, priority and timing of all capital credits retirements. Then, the Board may vote to retire capital credits by essentially making a cash payment to people who were members during a certain period of time.

For 2015, the Board has authorized distribution of capital credit retirements to member-owners in the amount of $804,925. This amount includes 100% equity from 1979, 50% equity from 1980 and 10% equity from 2014. Therefore, people who were members in 1979, 1980 and 2014 may receive a capital credit payment. Roughly 10,500 active and former members will receive a check this year. If the amount is $10 or less, the amount will be carried over to the following year. Most checks for residential members will range from $10.01 to $50. Checks will be mailed to member-owners’ most current address listed on the Cooperative’s records during the first two weeks in October.

If you are a newer member this year, you will not receive a capital credit check this year.  It is important to notify the cooperative if you have moved or intend to move.  Even if you no longer have electric service with the cooperative, we will continue to keep up with the capital credited to your account, and you will still be eligible to receive a capital credit check in the future. 

At the end of the day, co-op members are co-op owners. For the past 21 years, SEMO Electric has paid back capital credits – a total of nearly $12 million – as we strive to provide safe, reliable and low-cost electric service.

Sean’s Shout-outs

September shout-outs to members-owners Ronnie Elliott, Carol & Jim Russell, James Abner, John Bixler and Lambert's Cafe.

Be smart. Act safe.

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