September 2024 | A Mission To Push Forward | “Power Perks” Checks Arriving This October for Members

Posted: September 1, 2024 at 8 a.m.

By Sean J. Vanslyke | sean@gosemo.com

SEMO Electric Cooperative’s Board of Directors has resolved to return $900,000 in capital credits, or “Power Perks,” to you – our member-owners – in October. This decision brings the total amount returned to members since 1995 to over $20 million. These capital credits represent actual cash given back to those who purchase electricity from the cooperative.

Why does SEMO Electric return money to its members? This practice is fundamental to the cooperative business model and its mission to make other people’s lives better. Unlike investor-owned utilities that pay dividends to shareholders, cooperatives operate on a not-for-profit basis, returning excess revenues to their member-owners. When the cooperative generates a margin, or profit, it is allocated back to members based on their usage over the year. Over time, these allocations are returned to members as capital credits.

It’s important to understand the financial dynamics of a cooperative. Predicting weather, electricity demand, and economic fluctuations is challenging. Therefore, when SEMO Electric achieves margins, these funds help maintain a reasonable level of equity. This equity is crucial for the cooperative to secure financing for capital-intensive projects, such as the installation and maintenance of poles, wires, and other infrastructure. These investments are often financed over a long period, typically 20 to 30 years, similar to how individuals finance their homes. By balancing the return of capital credits and maintaining sufficient equity, SEMO Electric ensures it remains financially healthy and capable of providing reliable and affordable electric service to its members.

SEMO Electric is not alone in this approach. Hundreds of electric cooperatives across the United States operate in a similar fashion. These cooperatives collectively serve millions of members, following the same principles of returning excess revenues to their member-owners. This cooperative model supports local communities by keeping money within the region, fostering economic growth, and ensuring that electric service remains affordable and dependable. The widespread success of electric cooperatives across the country underscores the effectiveness and sustainability of this member-focused business model.

We should appreciate this cooperative business model because it prioritizes the well-being of its members and the community over profits. By reinvesting in the local area and returning excess revenues to members, SEMO Electric and cooperatives like it provide a stable, fair, and community-oriented approach to delivering essential services. This model not only ensures equitable and affordable electricity but also strengthens the bonds within the community, driving positive local development and economic resilience.

Book of the Month: “Without a mission, it is easy to lose perspective on what truly matters. A mission will make you think beyond the moment, which is greatly important because the only thing that is significant about the moment is who you become in the process, and the impact you have on others.” Chop Wood Carry Water by Joshua Medcalf

Sean is the CEO/GM of SEMO Electric Cooperative and GoSEMO Fiber.

Sean shared some of his favorite business books while speaking at the Iowa Association of Electric Cooperative’s Managers and Board Presidents Summer Conference. This reflects the sixth cooperative principle: cooperation among cooperatives. By learning from other like-minded cooperatives and working together through local, national, regional, and international structures, cooperatives like SEMO Electric effectively serve their members and strengthen the cooperative movement. This collaborative spirit underpins SEMO Electric’s commitment to returning capital credits to its members, reinforcing the community-focused business model and benefiting all member-owners.
SEMO Electric Cooperative will return $900,000 in capital credits, or “Power Perks,” to you – our member-owners – in October. This decision brings the total amount returned to members since 1995 to over $20 million. Members should watch their mailbox in October as “Power Perks” checks will be mailed to members’ most current address listed on the Cooperative’s records. If the amount is $10 or less, the amount will be carried over to the following year.