An update from the Board President

Co-op Principle #3, Members’ Economic Participation, is perhaps the most difficult principle to wrap our minds around, but it is also the most important in differentiating cooperatives from other business models. 

In a cooperative, members contribute equitably to the capital of their cooperative. At least part of that capital remains the common property of the cooperative. Being a not-for-profit cooperative, Central allocates surpluses for a number of purposes: developing the cooperative, benefiting members in proportion to their transactions with the cooperative, and supporting other activities approved by the membership. This capital represents the most significant source of equity for the cooperative.

When you signed up to receive electric service from Central you became a member of the cooperative. While investor-owned utilities return a portion of any profits back to their shareholders, electric co-ops operate on an at-cost basis. So instead of returning leftover funds, known as margins, to folks who might not live in the same region or even the same state as you do, Central allocates patronage capital annually back to you, the membership, based on how much electricity you purchased during a year. 

Central also retires patronage capital, that means that members who purchased power during defined years will receive a check, reflecting their contribution of capital to, and ownership of, the cooperative during those years. 

This year, we’re retiring patronage capital from the years 1990, 1991 and 1992. That may seem like a long time ago. However, those funds helped us keep the lid on rates, reduced the amount of money we needed to borrow from outside lenders to build, maintain, and expand a reliable electric distribution system, and covered emergency expenses.

Each year, the Central Board of Trustees makes a decision on whether to retire patronage capital based on the financial health of the cooperative. A cooperative’s ability to retire patronage capital reflects the cooperative’s strength and financial stability. Central has retired more than $5.5 million in patronage capital over the past five years. These retirements reflect Central’s strong and stable financial position.