Capital Credits

As the electric utility industry continues to evolve, face continual change and explore different ways to serve customers, we can all be proud that we are part of the electric cooperative program. Electric cooperatives have a very unique business model that has proven to benefit cooperative members and has stood the test of time for 87 years.

The most profound and distinct difference between electric cooperatives and other utility business structures is that electric cooperatives are not-for-profit organizations that are member-owned and member-controlled. As a not-for-profit organization, your Cooperative does not strive to produce profits for shareholders and investors but must maintain a sound financial position for the membership. Your Cooperative sets the electric rates high enough to cover the costs of providing service and at the end of the year, any funds that were collected above the cost of service are allocated to you, our members, in the form of capital credits.

These capital credits are retained by the Cooperative and used to build and maintain the infrastructure necessary to serve the members and service the long-term debt of the Cooperative. When the financial condition and cash position of the Cooperative permits, the capital credits are then retired and paid back to you, as members and owners. Every year your Cooperative mails capital credit statements to every Cooperative member notifying them of their allocated capital credit balance and the amount of capital credits allocated to them in the previous year. This statement shows each member their equity and ownership in the Cooperative.

For the past 15 consecutive years, your Cooperative has retired and returned capital credits to members. However, the year 2025 has been a very challenging for your Cooperative due to the damaging storms experienced. The first storm, officially named Winter Storm Blair, brought significant amounts of freezing rain and ice on January 5th and followed that with an arctic blast and finished with snow on the 10th. This is one of the most damaging storms on record in your Cooperative’s 87-year history. This storm resulted in ice accumulation throughout the Cooperative’s service territory, with some locations exceeding over 1 inch of ice, and resulted in approximately 16,000 outages.

After experiencing Winter Storm Blair, the Spring season began and more severe storms, including damaging winds and devastating tornadoes traveled thru your Cooperatives service territory. In total, your Cooperative’s distribution system experienced damage from seven confirmed tornadoes, including a devastating EF4 tornado in Williamson County just south of Marion. The year 2025 will long be remembered for the very devastating storms that plagued Southern Illinois and proved to be very challenging – not just for our Cooperative but for many people in our communities who have suffered tremendous losses as well.

Given the extensive storm restoration expenses incurred this year ($3.7 million above budget) which will result in a significant operating loss for the year and your Cooperative’s desire to keep rates as reasonable as possible, the Cooperative will need to forgo the retirement and return of capital credits this year.

I would like to close by stating that all of us can be proud to be a part of the Electric Cooperative program. The founders of the electric cooperative program developed a unique business structure that by its very nature, makes electric cooperatives very accountable to the members it serves. This unique structure has contributed to the success of your cooperative over the years and remains unchanged even today, some 87 years later. Your cooperative is governed by local people that live and work in your very own communities. Your cooperative is operated by a group of local employees that also live and work in your very own communities. Your cooperative’s sole purpose is to provide you, as cooperative member-owners, with reliable and quality service at equitable rates.

See you next month and as always, “We’ll keep the lights on for you.”