Board Approves Record $1,685,230 Capital Credit Retirement // CEO Column December 2020

As a cooperatively owned entity, Lake Region Electric Cooperative is organized and operated under a business plan that is vastly different than utilities run by municipalities or investors. Our Cooperative Difference means three important things:

1. Most critically, Lake Region Electric Cooperative is owned by those using its services — our members. This keeps our focus squarely on providing the membership with quality service and programs that enhance their lives and communities.
2. Secondly, it is the membership that elects the cooperative’s board of directors. Directors are elected by their peer members to represent the geographical area in which they reside. Directors are local, accessible, and accountable to the cooperative members.
3. The third point is that the member-owners share in the financial gains made by the cooperative. This is done through the return, or retirement, of capital credits. When the cooperative makes a profit, what we call margins in the cooperative business model, this money is allocated to each individual member’s capital credit account. The dollar value of the capital credits returned depends on the individual member’s patronage with Lake Region and the percentage of return determined by the directors for the year.

Since the first disbursement of capital credits to Lake Region members in 1958, cooperative members have shared in $30,666,913.99 in capital credits. When capital credits are retired, the money flows directly back to the members and into their communities from where it was generated.

As you can see on the accompanying graph, Lake Region has posted a steady increase in the amount of capital credits retired during nine of the last ten years. Year after year, we have had record capital credit retirements. For seven of these years the disbursement was more than a million dollars. 2020 is no exception! This year, our total capital credit retirement is $1,685,230!

Another benefit for our members is that Lake Region is part of the Great River Energy (GRE) system of electric cooperatives. GRE is a supplier of wholesale electric energy that also operates as a cooperative. When GRE returns capital credits to Lake Region, we, in turn, pass these capital credits through to our members. Contributing to our record 2020 capital credit return is $239,087 from GRE.

The ability to retire capital credits is a sign of the cooperative’s financial strength. This past year, although very unconventional in many ways, has proven to be a wonderful year financially. Along with our strong financial position, member equity in Lake Region Electric Cooperative has also been steadily growing. We are on the right track and this is great news for our member-owners.

Read the details about the District Meetings that will be held in early February 2021. In a spirit of safety, your directors determined it would be best to hold these meetings virtually using interactive electronic voting. This decision needed to be made early so that we could accommodate the extensive amount of planning needed to make the process flow smoothly. This will be different for all of us, yet may allow more members to participate. We will tell you more as the plans are solidified.