At our Cooperative, members are a part of something special. Our members collectively own Lake Region Electric and enjoy several benefits unique to cooperatives. Capital credits are fundamental to the cooperative business model and a financial benefit our members enjoy.
Because LREA is a not-for-profit cooperative, owned by its members, it doesn't technically earn profit. If revenues exceed expenses, or margins, those margins are assigned to you in proportion to the amount you are billed for electricity during the year. These "capital credits" reflect your ownership in LREA but are not automatically returned to you. The Cooperative uses capital credits to fund operating activities and reduce borrowing, with the intent of repaying this capital to you in later years.
After reviewing the Cooperative's finances each year, the board of directors determines whether a portion of capital credits can be retired, or returned, to members. The board also evaluates the method, basis, priority and timing of all capital credit retirements. Because capital credits are based on the dollar amount of electricity a member purchases, the retirement amount will vary from member to member from year to year.
Capital Credits 2020
Capital Credits Refunded Early
One thing that sets Lake Region Electric Association apart from other Electric companies is that we are a member-owned, not-for-profit electric cooperative. LREA allocates any excess margins to our consumers after paying all the bills and reinvesting what we need to keep electric costs as low as possible. Lake Region tracks the allocations and refunds the money as cash positions allow, back to you, our member-owners.
Due to the Covid 19 pandemic causing financial difficulties or many of our members in the spring, it was decided that the capital credits would be disbursed early to current, active members of Lake Region Electric Association. Members should have noticed the credit on their April billing that is sent out at the beginning of May. The bill clearly showed the capital credit as a deduction and should be kept for tax purposes. Inactive members were mailed a check in June.
The Lake Region Electric Association Board of Directors approved approximately $515,000.00 in capital credit retirements at their regular meeting in March. The amount retired consisted of the remaining 75% of 1993, last year the first 25% was disbursed. Also included in this year’s approved retirement was 20% of 1994 capital credit and 25% of 2019. The amount that each member is refunded is based on the electricity purchased during the years for which capital credits are being paid.
A complete explanation of the cooperative’s capital credits, patronage capital, can be found in the LREA Bylaws. A copy of the Bylaws is available in digital format on our website: www.lakeregion.coop. Anyone who needs a new, paper copy, of the Bylaws can contact our office by calling 605-345-3379 or toll free 1-800-657-85669 or by emailing your request to firstname.lastname@example.org.