Manager Connection: Capital Credit Equity Retired

General Manager Syd Briggs

I hope you took notice of the front page of this month’s Sparks newsletter. The Steele-Waseca Cooperative Electric board of directors approved the retirement of $2.303 million in capital credit equity allocated in 2001, 2002, 2023 and estimated estate settlements for 2024.

Our average retirement, or refund, over the past five years has been $1.762 million which makes this year’s refund $541,000 more than the average.

The seventh cooperative principle is Concern for Community. Steele-Waseca carefully makes contributions each year to community organizations like United Way and food shelves, along with scholarships to a number of our graduating high school seniors. We have been diligent in maintaining a healthy equity ratio in recent years and were able to increase the refund for this year. We will also maintain our great history of retiring equity in future years.

Every year Steele-Waseca receives questions from our member-owners regarding capital credit equity. For those who are new to a cooperative, or not familiar with how capital credit equity works, keep in mind that when you signed up to receive electric service from Steele-Waseca, you became a member of an electric co-op.

With investor-owned utilities returning a portion of any profits back to their shareholders, electric co-ops operate on an at-cost basis. This means Steele-Waseca allocates 100 percent of its margins or profits (revenue less expenses) to its members who purchased electricity during the year, and retires or pays back those margins at a future date to those very members.

Instead of returning the margins to people or companies who had little or nothing to do with the generation of those profits, or who probably don’t even live in the same region or state that you do, Steele-Waseca returns margins to those who actually purchase and use our product. Steele-Waseca allocates and retires capital credits based on how much electricity you purchased during a year.

Where does the money come from? Member-owned, not-for-profit electric co-ops set rates to generate funds to pay operating costs, make payments on any loans, and provide an emergency reserve. At the end of each year, the co-op subtracts operating expenses from operating revenue collected during the year. The balance is called an operating “margin.”

Can we get our retirement of capital credits sooner? The board of directors has the responsibility of balancing the amount of equity with the cost of debt, and therefore, the amount of capital credit retirements each year. The higher the equity we maintain, the lower the debt, and the less we have retired in capital credits. However, the cost of our debt is one of the major components in our rates. Most co-ops attempt to maintain an equity-to-asset ratio between 30% and 50%; Steele-Waseca is at 48%. Our overall objective is to reward both past and current ratepayers with a balanced approach of retiring past and current capital credits each year, and maintaining the most manageable level of debt possible.

At Steele-Waseca, the board of directors make a decision in the fall of each year to retire capital credits. The co-op has retired over $26 million in capital credits to its members since 1966.

I did not have electric service from Steele-Waseca during 2001, 2002, or 2023. Will I get any retirement? No. This year capital credit retirements are only being made to members who purchased electricity from Steele-Waseca in 2001, 2002, and/or 2023.

How will the retirement of capital credit equity work? Inactive or former members, who no longer purchase electricity from Steele-Waseca (but purchased electricity during the years being retired) will receive a check. Due to the expense involved with processing and mailing printed checks, current members eligible to receive capital credit equity will have that amount credited to their Steele-Waseca account on their bill coming in December 2024.

What if I moved? If you move or no longer have electric service with Steele-Waseca, it is important you inform the cooperative of your current address, so future retirements may be properly mailed to you. If you purchased electricity from Steele-Waseca during the years being retired, then you are entitled to a capital credit retirement, even if you move out of Steele-Waseca’s service area. If Steele-Waseca has your current address, then the co-op will send your retirement check by mail.

If you have additional questions regarding your equity, please feel free to contact Steele-Waseca during regular business hours.   #swceTRUST

Options for paying your Steele-Waseca electric bill

Steele-Waseca Cooperative Electric encloses an envelope in their monthly statements for members to mail in their payment so it is received at the co-op’s office by the due date.

However, if you wait until the due date to pay, the postal service won’t be able to deliver it on time. Listed below are options for you to consider if you wish to pay your bill on time and avoid a late charge:

• Sign up for auto pay. Steele-Waseca has an option for members to pay from a checking or savings account (see form below), or a debit or credit card. The auto pay option for checking or savings accounts is processed by the Steele-Waseca office on the 5th of the month, unless the 5th falls on a holiday or weekend, then it is processed on the next business day.

For auto pay from a debit or credit card, Steele-Waseca accepts Visa, Mastercard, or Discover. Payments are processed on the due date listed on your statement. If the due date comes during a holiday or weekend, payments are processed on the next business day. The co-op does not assess additional charges for payments with a debit or credit card.

Regardless of which auto pay option you choose, Steele-Waseca has a form for you to complete as written authorization is required for the co-op to access your account for payment. The co-op will mail or email the requested auto pay form, or you may download it from Steele-Waseca’s website, swce.coop, and mail or email the completed form to the co-op’s office. 

• Call the Steele-Waseca office to make your payment. Member service representatives at the co-op’s office are available weekdays by phone from 8 a.m. to 4:30 p.m., to process payments from a checking account, or debit or credit card. For after-hours payments, representatives with the Cooperative Response Center will be able to process your payments by phone.

• Visit swce.coop to pay online. Members may follow the directions on Steele-Waseca’s website to register their account, or may use the bill payment option found on the website’s home page.

• Utilize your financial institution’s bill pay service. Keep in mind that while your bank may take out the money from your account as soon as you authorize it, it doesn’t electronically get transferred to Steele-Waseca. Often it goes to a processing center where a check is prepared, then mailed to Steele-Waseca. You are encouraged to submit your bill pay seven to 10 days before the due date. If you go with this option, please use the co-op’s mailing address of P.O. Box 485, Owatonna, MN as Steele-Waseca doesn’t have a mailbox at its street address of 2411 W. Bridge St., in Owatonna.

• Utilize the co-op’s drop box near the main entrance to Steele-Waseca. The drop box is adjacent to the flagpole and is checked twice daily.

• Stop in the co-op’s office to drop off your payment. Steele-Waseca’s office is open Monday through Friday from 8 a.m. to 4:30 p.m. We enjoy receiving payments in person from our members. If you arrive too early or late, put your payment in the drop box.

If you have questions, or need additional information regarding bill payment options, please call Steele-Waseca during regular business hours. 

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