Delta-Montrose Electric Association (DMEA) members will receive approximately $2 million in capital credit retirement checks this month. The DMEA board approved a $2.6 million capital credit retirement during its October meeting.
"To really help our members when they need it most, we are issuing a retirement in December. Everyone likes some extra money during the holiday season," explained Bill Patterson, DMEA board president.
An exciting change in the retirement process is also taking place. DMEA will issue checks to members for their portion of the retirement, rather than only offering bill credits. "By giving the members their refunds in check form, we really put the money back into their pockets. Each member who receives a capital credit check can use their money how they see fit. We feel that this will have a greater impact on our local economy, rather than simply offering a bill credit as we have in the past," said Jasen Bronec, chief executive officer of DMEA.
DMEA is issuing checks in order to help members understand the real benefits of cooperative membership. A capital credit check is a tangible example of what makes cooperatives different. By issuing checks, the cooperative allows members to decide how they want to use the money, whether for a latte or a tank of gas. Plus, if spent locally, the capital credit checks have double impact: they boost the local economy.
"The economic impact of the $2 million in capital credits being given back to our local citizens could be equated to a company employing more than 50 individuals with an average salary of $40,000. These dollars, if spent in our local economy, would have an economic impact of over $10 million. In addition to the benefit seen by our local businesses, our local governments will also see added revenues through sales tax collection. These dollars, given through capital credit returns, demonstrate the value of having a local, member-owned utility," explained Sandy Head, executive director of the Montrose Economic Development Corporation.
What are capital credits?
As a not-for-profit member-owned cooperative, DMEA doesn't work to earn profits for shareholders. The cooperative works for the people it serves -- its members. Individuals who purchase electricity from the cooperative are considered members. This also means that any profits (or "margins" as they are called in the co-op world) DMEA earns are returned to the member-owners. DMEA typically returns margins on an approximate 25-year schedule.
Who will get a check in December?
DMEA is retiring capital credits that were allocated in 1990 and some from 1994. Everyone who was a DMEA member in 1990 or 1994 will receive a capital credit retirement. Retirements $10 or greater will be mailed as checks. Retirements less than $10 will be issued as bill credits. The total value of the checks to be mailed out to members is $1,977,300.
How does DMEA determine how much you get?
At the end of each year, all of the margins DMEA has earned are allocated back to each active member from that year. The amount allocated to each member is based on the amount of investment they made into the cooperative through the purchase of electricity. The more electricity a member purchased, the more they invested into DMEA, which means that member's allocation will be greater than another member who purchased less electricity.
Once the margins have been allocated to the members, they are used by DMEA for a period of time for reliability and system improvements. At the end of a set period of time, allocations are returned to members in the form of capital credit retirements. "This process literally represents our members' investment into the company they own," explained Bronec.
What happened to the additional $600,000?
Although DMEA's board of directors approved a $2.6 million retirement, the cooperative is only mailing $2 million in capital credit checks. There are several reasons for this:
• Members with a refund of less than $10 will not receive a check; rather they will receive a bill credit. This accounts for $4,500.
• If a member leaves DMEA with bad debt still on the books, their capital credit retirement goes against that bad debt. This accounts for $71,000.
• If a member is inactive and has a past due bill (but not yet bad debt), their capital credit retirement goes against their past due bill. This accounts for $4,000.
• Finally, members who have left the system and no longer have a correct address on file with DMEA account for $579,000. DMEA will post listings of these members in an attempt to reach them, so they can claim their capital credits. After a period of five and a half years, any credits left unclaimed will be transferred into the cooperative's unclaimed capital credit fund. This fund is used only for charitable and educational causes in the local communities.
For more information on this year's capital credit retirement, your capital credit checks, contact the co-op at 1-877-687-3632 ext. 391 or firstname.lastname@example.org<mailto:email@example.com>.