Member Cooperatives receive checks for retired capital credits
(BENSON) Sometimes, the value of being in a cooperative can actually be put into dollars and cents. While the Seven Cooperative Principles range from voluntary and open membership to concern for community, another benefit to our Member Cooperatives and their members at the end of the line is receiving retired capital credits, or the money that remains after paying for all of the expenses of operating a not-for-profit utility. Arizona Generation and Transmission Cooperatives (AzGT) delivered a check from one of its cooperatives, Arizona Electric Power Cooperative (AEPCO), for almost $400,000 to Sulphur Springs Valley Electric Cooperative (SSVEC) on Wednesday, February 20th.
“This is the largest check we’ve received yet from AEPCO,” said Dan Barrera, who is president of the SSVEC board. “I’m always proud to serve as an elected director for SSVEC and to also serve on the AzGT board. This is a testament to the leadership of the AzGT management team that values the needs of its Members.”
AzGT CEO Patrick Ledger presented the check for $399,026.68 to Barrera at the SSVEC board meeting and provided an update on AzGT operations. Barrera credited him with being readily available to the board and providing the perspective of someone who must focus on operating a G&T cooperative 24 hours a day, seven days a week.
“The direction of the AzGT board has been to rely on the discretion of the management in place,” Barrera said. “That has clearly been a well-received message, since AzGT continues to make innovative decisions that protect the integrity of its operations while also maintaining an efficiency that pays back its Members.”
“AEPCO did not retire patronage for many years as it focused on rebuilding its financial strength after several years of low equity,” explained AzGT CFO Pete Scott. “In 2012, after carefully reviewing our financial situation, we began a program of patronage retirements to our members. We have issued retirements every year since 2012 and the total dollars have increased by an average of approximately 18% per year.”
In December 2018, the AzGT board authorized the retirement of $1,285,977.14 in patronage capital from AEPCO to its Members. Along with SSVEC, Trico, Mohave, Graham County, Duncan Valley and Anza electric cooperatives will receive checks. Scott explained that the amount that each Member receives is calculated through an allocation method that considers the tenure of Members who have been contributing the longest while also rewarding the contributions of newer Members. The result is for each Member to receive an equitable allocation.
“It is an important part of operating according to Cooperative Principles to allocate capital credits to members each year and to retire capital credits when authorized by the board,” Scott said. “Our Members have an economic stake in AEPCO. They pay rates sufficient to meet the co-op’s operating expenses and financing needs, and to provide margins to meet our equity goals. Members are also entitled to a return of their equity investment, at some point, in proportion to their contribution to AEPCO.”
“We trust that AzGT management will continue to make decisions that put AEPCO in the best position for both the present and the future while also protecting the interests of our members,” Barrera said.