SEC Retires Record-Breaking $5 Million in Capital Credits to Members
CONTACT: Allan Sharrett
V.P., Public & Member Relations
(800) 552-2118, ext. 3211
CREWE, VA - Southside Electric Cooperative (SEC) announced a retirement of approximately $5 million in capital credits to members across its 18-county service area this month. The record-breaking retirement was twice the amount of SEC’s highest capital credit refund in its 77-year history.
"Allocating and retiring excess revenue to members helps distinguish cooperatives," noted Jeff Edwards, SEC’s president & CEO. "This year’s unprecedented capital credit retirement is a reflection of the commitment that this co-op’s Board of Directors and I have made to ensure that SEC’s members truly own their electric utility. We’re also proud to support our communities by putting money back into the local economy — and into the pockets of those we serve. It makes our business model quite unique, especially in this day and age."
While investor-owned utilities return a portion of any profits back to their shareholders, electric cooperatives operate at cost. SEC periodically retires a portion of the members’ allocated excess revenue, in the form of a capital credit refund. The amount of each allocation and retirement is based on how much individual members paid the co-op for electric service during that period. The return of capital credit retirement checks to co-op members reflects their contribution of capital to, and ownership of, the cooperative over time. This year’s refund checks represented the retirement of at least 6.4 percent of the balance of individual members’ total SEC capital credit allocations.
While these funds remain vital to the financial well-being of the cooperative, SEC was extremely proud to return this money to its member-owners. These dollars have helped the cooperative keep rates competitive, reduced the amount of money needed to borrow from outside lenders to build and maintain a reliable electric distribution system, and helped cover emergency expenses such as those incurred during hurricanes or major ice storms.
"Capital credits are paid back in cash to the members as the cooperative is financially able to do so," noted Edwards. With this year’s retirement of approximately $5 million to active and inactive members, a total of nearly $44 million has been refunded to SEC members over the past 30 years. "SEC is, however, limited by the Rural Utilities Service, its primary mortgagee, as to the amounts it can return annually," Edwards said.
Since 2008, SEC has been among the highest-ranking electric co-ops, both nationally and in Virginia, for capital credit retirements. This year’s historic $5 million level is expected to bring SEC near, or at the top, of this list. "Retiring capital credits is the Cooperative Difference, and it’s just one more way SEC is looking out for our members," added Edwards.