Spring Safety & Capital Credits
As spring approaches many of us, after a long dreary winter, are itching to get outdoors and start working or playing. As these outdoor activities start, I want to remind all of you to be aware of overhead power lines and where they are located in relationship to your activities.
Tree trimming, antenna installations and ladders are of particular concern. If a line appears too close to the area in which you are working, please call us for assistance to evaluate the situation before you start working.
Also, if you are planning any kind of an excavation project, Oregon law requires that you contact the Oregon Utility Notification Center at 811 two business days before you dig. The notification center will notify us and we will locate, and mark, any Wasco Electric owned underground wires located in the area to be excavated.
CAPITAL CREDITS
Capital Credits are unique to cooperatives like Wasco Electric. Private power companies make profits and pay dividends to stockholders. Cooperatives, on the other hand, work on a nonprofit basis and allocate their operating income back to their members. Capital Credits represent your share of the Cooperative’s operating income (operating revenue remaining after operating expenses). The amount designated in your name each year depends on your energy purchases for the year. To calculate this, we divide your annual energy purchase by the Cooperative’s operating income for the year. The more electricity you buy, the more capital credits you earn.
Just recently, each member received a statement of their 2009 Capital Credit allocation. The member’s allocation amount is based on the year-end operating margins of $631,957.18 dollars divided by the total patronage from 2009 sales of $7,866,927.69 dollars. This equates to a percentage of 8.03 percent of each members 2009 billings being allocated back to the member.
Capital Credits are not necessarily dollars in a bank account somewhere, but rather they represent funds that have been invested in the cooperative’s utility plant.
During most months of the year Wasco Electric receives more cash from operations than is necessary to pay for operating expenses. However, the Cooperative needs cash for purposes other than paying for operating expenses. Wasco Electric must service its debt (payments of principle and interest on money the cooperative has borrowed). Wasco Electric must also use cash to pay for capital expenditures. The amount of cash needed for capital expenditures is largely determined by the growth of a utility and the replacement schedule of its aging system.
The distribution of capital credits and its effect on the financial well-being of the cooperative is an issue your Board of Directors deals with each year. It is the policy of the cooperative and the discretion of the board to return capital credits as long as the cooperative is financially fit to return them without additional borrowing or the need to raise rates to pay capital credits.
In 2009, Wasco Electric refunded $70,056 dollars in general retirements of the 1984 capital credits. Additionally, the cooperative paid $84,882 dollars in special retirements to the estates of deceased members.
