Capital credits refunds surpase $20 million to members
For the 32nd consecutive year, Lorain-Medina Rural Electric Cooperative's current and former members are receiving patronage capital credits refunds form their cooperative.
The cooperative's board of trustees approved a patronage capital credits refund of $1,281,641 at its November meeting. Including this year's refund, over $20.2 million has been returned to members since 1982.
The cooperative annually retains margins to provide working capital for new construction, equipment and system improvements throughout the cooperative's service area. If LMRE retains margins, they are allocated back to the members.
The amount of the member's patronage is determined by how much electricity is purchased over the year as well as the rate under which the member is billed. The total amount of the member's refund will gradually increase the longer a member remains with LMRE.
"Returning margins to our members is what sets cooperatives like Lorain-Medina apart from other utilities," said John Eaton, LMRE Board of Trustees president. "The return of margins also sends a positive message to members that the cooperative is financially stable, and the board is doing its job effectively and efficiently."
"We're proud to be able to issue patronage capital credit refunds," Eaton said. "We're a not-for-profit electric cooperative. Our wholesale power rates are competitive and out forecasts show they will remain competitive for years to come. The 24 Ohio electric cooperatives, including LMRE, have invested more than $1 billion in environmental controls at our coal plants and they meet or exceed current EPA emission standards. Our outage statistics are among the best in the state thanks to a strong maintenance program. When you add all those together and consider we're still able to refund $1 million in patronage capital credits to members and former members, it speaks so highly of the cooperative business model."
Each year, the cooperatives financial condition is examined by the board of trustees to determine the refund amount.
For more information about capital credits or to view the 2014 Unclaimed Funds list, visit the capital credits web page.
Capital Credit Refunds
Q: When can I expect to receive my capital credits refund?
A: Capital credits refunds of $99.99 or less will be credited to active members' December electric bills. Capital credits refunds of $100 or more will be mailed as checks to active members in December. All payments to former members will be mailed in December.
Q: Are capital credits taxable income?
A: Capital credits are a return of the previous year's margins and are not taxable unless electricity is claimed as a business expense.
Q: Why do I get a capital credit refund?
A: Capital credits are each member's share of margins, determined by how much electricity was purchased during the year and the rate under which the member was billed. The return of capital credits sets electric cooperatives apart from other utilities. One of the seven cooperative principles is to operate on a not-for-profit basis by returning any net savings to members on the basis of patronage.
Q: I am a new member. When will I start receiving capital credits refunds?
A: Most members will begin receiving a refund in the second full year of service. Refunds are issued each December, pending board approval.
Q: How does the cooperative determine the amount of my capital credits refund?
A: The LMRE Board of Trustees determines and approves the total refund annually based on the cooperative's margins. The board has to ensure the cooperative is financially stable to refund capital credits by working closely with the management team.
Q: I have lost my capital credits check. Will the cooperative send me a new one?
A: LMRE will be happy to replace old refund checks. However, the cooperative does have to wait until the original check has expired, which is 90 days. At that time, the cooperative will verify the check has not been cashed and will forward the refund information to the accounting department for replacement.
Q: I no longer live within the cooperative's service territory. What happens to my capital credits?
A: Each member is entitled to continue receiving an annual capital credits refund based on the time he or she received service from Lorain-Medina Rural Electric Cooperative. Please remember to notify the cooperative of all address changes to ensure prompt delivery of the refund.