Manager Connection – Record-Breaking Capital Credit Equity

By Syd Briggs,
General Manager

Did you notice on the front page of December’s Sparks newsletter, the Steele-Waseca Cooperative Electric board of directors approved the retirement of $1.694 million in capital credit equity allocated in 1994, 1995, 2020, and estate settlements in 2021.

Our average retirement, or refund, over the past 10 years has been $1,091,209, which makes this year’s refund $602,791 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 be able to maintain our great history of retiring similar amounts in years to come.

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 and operating “margin.”

Can we get our retirement of capital credits sooner? Steele-Waseca currently has an equity-to-assets ratio of 50 percent. 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 ratio between 30 and 50 percent. 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 $20.4 million in capital credits to its members since 1966.

I did not have electric service from Steele-Waseca during 1994, 1995, or 2020. Will I get any retirement? No. This year capital credit retirements are only being made to members who purchased electricity from Steele-Waseca in 1994, 1995, or 2020.

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 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 2021.

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 electric- ity 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.

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Steele-Waseca Cooperative Electric board approves new record retirement of capital credit equity

The Steele-Waseca Cooperative Electric board of directors, during their Oct. 27 meeting, approved the co-op’s record-breaking retirement of $1.694 million in capital credit equity allocated in 1994, 1995, 2020, and estate settlements in 2021. The previous record was $1.615 million retired in 2020.

All current and former member-owners who received electric service from Steele-Waseca during the years listed above are eligible for the refund if electric sales exceeded power costs.

For convenience and to save on check processing and mailing costs, current member-owners eligible for this year’s refund will have the amount of their equity applied as a credit on their Steele-Waseca bill received next month (December 2021).

All former member-owners eligible for a refund will have their equity mailed to them by check.

Capital credit equity comes from the cooperative’s margins or profits. The co-op’s margin each year is determined by subtracting operating expenses from operating revenue collected during the year.

Your equity is reserved for you, even if you move away from the area. That’s why it is important for you to make sure Steele-Waseca always has your current address and phone number.

Until it’s refunded to members, the equity is used to finance new construction and system improvements. Using members’ equity helps Steele-Waseca provide electric service at a lower cost than if all construction funds were borrowed from other resources.

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Our focus is you—the member

Here’s a fun question: how do you show value?

One could do this by telling about price in comparable products. One could tell about value through accessibility or timeliness of a product. We could tell you about the value of eating a hamburger—it’s reasonably priced, there is easy access to it from a drive-thru and it was at just the right time for lunch break. All these items are true, but do they show the value of the hamburger? What if the true value of the hamburger was in its nourishment to the body?

What if the value of the hamburger was also in the beef producer that raised it? What if the value was in the restaurant owner that sold it to support their family? How do we show value rather than tell about it?

How do we show cooperative value to member-owners?

As you well know, our cooperative was started to form member-ownership in our service area for delivering electricity to member homes, farms and businesses. Eighty-five years later, Steele-Waseca is still delivering electricity to our member-owners and want to show, through our service and programs, how we keep you, the member, in focus.

Rooted in strategic direction from the co-op’s board of directors, seven cooperative value areas have been identified that keep our member-owners in focus. These value areas identify the “why” or purpose of our work. The seven value areas include: Quality Service, Cooperation and Collaboration, Life+, Growth, Appreciation, Trust and Innovation. In addition to identifying these value areas of the co-op, we’ve added an image, a visual icon that represents the value area. The adage is true: a picture is worth a thousand words, and we believe by assigning an icon to each of the seven areas, we’ll be better able to show Steele-Waseca work, like programs, rates, projects, and benefits of cooperative membership, in value-form.

While we hope you agree we have a long-standing history of providing great communication on cooperative updates and information, the desire of this enhanced value-communication approach will create awareness and provide additional education for our membership. Over the next three years, Steele-Waseca plans to highlight two to three values per year. While all efforts at the co-op are multi-valued, we feel that by demonstrating projects and happenings through value icons, their purpose will be clearer to our member-owners.

A few changes you’ll notice will be use of the value-area icons in our Sparks articles, as well as our website and social media posts. Steele-Waseca plans to bring this visual showing of value to our events, like town hall meetings, as well as our printed messages like news releases and co-op letterhead. Identifying cooperative value will show there is much more to Steele-Waseca than delivering electricity. We also deliver on membership value because we keep our members in focus—even if it’s over lunch break while eating a hamburger.

Steele-Waseca Cooperative Electric nominating committee appointments announced for 2022

The Steele-Waseca Cooperative Electric board of directors have made appointments to the 2022 Nominating Committee.

It is the nominating committee’s responsibility to prepare the list of director candidates, and post it at the cooperative’s office at least 30 days prior to the annual meeting scheduled Tuesday, June 7, 2022.

The election of directors will take place during the business portion of the annual meeting, held at Steele-Waseca’s headquarters, located at 2411 West Bridge Street in Owatonna. All Steele-Waseca members are eligible to serve as board directors. The governance role of directors can be summarized as being responsible for setting the overall policy, and monitoring the business affairs of the cooperative.

If you are interested in becoming a director, you may call Executive Assistant Jenifer Shimpach at Steele-Waseca, and a director nomination form will be sent to you.

Or, if you know another member who would make a good director, and you want him or her to be considered, please contact the nominating committee member nearest you. However, before you make the request, be certain the person will accept the position if nominated.

The Nominating Committee will conduct two in-person meetings. The first is scheduled Thursday, Nov. 11. The second meeting is scheduled Wednesday, Jan. 19, 2022. The committee would appreciate any assistance you can provide in helping them select director candidates.

All Steele-Waseca members are eligible to vote each year for all expiring board director positions. The districts electing directors at Steele-Waseca’s 86th annual meeting include the following:

District 2: Ryan/Jenny Angelow; Frank/Joyce Ahlman; Dale/Lynn Groskreutz: Dunbar, Lura and Minnesota Lake Townships in Faribault County; Mapleton, Danville, Medo, McPherson and LeRay Townships in Blue Earth County; Freeborn Township in Freeborn County; Alton, Byron, Freedom, Janesville, St. Mary, Vivian and Wilton Townships in Waseca County. (Represented by Geraldine Lienke)

District 4: Glenn/LInda Wiesjhan; Keith/Carol Scharader; Denise Bartness: Bath and Geneva Townships in Freeborn County; the Southwest one quarter (SW 1/4) and the Southeast one quarter (SE 1/4) of Berlin Township; Deerfield, Owatonna and Meriden Townships; the Northeast one quarter (NE 1/4) and the Southeast one quarter (SE 1/4) of Somerset Township, and Summit Township in Steele County; the Southwest one quarter (SW 1/4) of Warsaw Township in Rice County. (Represented by Dennis Ringhofer)

District 6: Joseph Haberman; Patricia Pagel; John/Lylia Iverson: Medford, Clinton Falls and Merton Townships; and the Northwest, Northeast and Southeast one quarters (NW, NE & SE 1/4’s) of Havana Township in Steele County, and Ellington, Concord, Claremont and Wasioja Townships in Dodge County. (Represented by Gary Wilson)

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Supporting electric co-op members across Minnesota, Connexus Energy successfully challenges unlawful BNSF practices

Courtesy: Minnesota Rural Electric Association (MREA)

Connexus Energy and electric cooperatives across the state were handed a critical victory, Sept. 9, regarding fees and requirements related to rail- road crossings.

The Minnesota Public Utilities Com- mission (PUC) decided in favor of Con- nexus in a petition for resolution of a dispute with BNSF Railway Company.

Utilities must cross existing railroad rights-of-way in order to provide necessary services to consumers, and electric cooperatives are no exception. Railroad companies and utilities are required to work together to maintain safety and smooth operations.

This ruling directs BNSF to comply with state law regarding access to railroad rights-of-way to enable construction and maintenance necessary for electric grid reliability. Connexus made every reasonable attempt to resolve the dispute through negotiation, but ultimately brought it to the PUC.

“Connexus and our members are grateful for the unambiguous 5-0 decision from the PUC,” said Nick Loehlein, vice president of electric operations for Connexus.

The Minnesota Rural Electric Association participated to communicate the interests of all electric cooperatives. “Together as a strong family of Minnesota cooperatives, we stood up for
what’s right for all electric cooperative member-owners,” added Loehlein.

In addition to Loehlein, the following people testified in front of the PUC: Felhaber Larson Attorney Sara McGrane, MREA CEO Darrick Moe, Todd-Wadena Electric Cooperative CEO Dan Carlisle, and Meeker Cooperative Light and Power CEO Tim Mergen.

History of right-of-way issues

After several years of the rail industry charging cooperatives unreasonable fees, in 2016 the Minnesota legislature passed a law that set a standard crossing fee and established a clear process and requirements for utility crossings of railways.

BNSF previously appealed a similar petition filed with the Commission in
2018, but the Minnesota Court of Appeals affirmed the statute.

Despite the statute, BNSF routinely charges Connexus and other electric cooperatives across the state unreasonable fees above what is allowed by statute, and subjects the cooperatives to
compliance with unwarranted additional requirements that risk grid reliability, delay construction and increase costs.

A critical victory

The Commission agreed unanimously with Connexus, deciding in their favor on all eight decision points. Additionally, Commissioner Tuma drafted a decision option for the Commission
to investigate the conduct that has been occurring. “This is a shining example of cooperation among cooperatives,” said Moe. “Connexus undertook the petition for the collective benefit of all of Minnesota’s not-for-profit electric cooperatives and their member-owners to ensure the continued delivery of reliable and affordable energy.”

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Manager Connection – Cooperative Principles

By Syd Briggs,
General Manager

You may recall last month, my column touched on the first three cooperative principles, so as cooperative month concludes, I’d like to reflect on the remaining four principles, as they, like the previous three, are essential to the co-op business model, benefit all members of the co-op, and make me thankful for all stakeholders in the co-op nation.

Autonomy and Independence

The fourth principle, Autonomy and Independence, means the co-op operates in an autonomous way that is solely directed and guided by its members, reflecting the values and needs of our local communities in our service area. This means the co-op is not being influenced by leaders or shareholders several states away. Instead, the co-op is led by the local members it serves.

Education and Training

The fifth principle, Education and Training, focuses on enhancing the knowledge of co-op employees and board members, which enables them to contribute to the development of the co-op.

By investing in continuous learning for our employees and board members, our co-op is making a commitment not just to individual professional and personal growth, but to the future of the co-op and the high quality of service our members expect and deserve. It’s a win-win situation.

We also strive to inform our members, which is you, and the public about the mission and operations of the co-op. In fact, that’s why you receive a Sparks newsletter each month, so we can share the latest co-op news and updates, as well as energy efficiency and safety tips.

Cooperation among Cooperatives

Cooperation among cooperatives is the sixth principle and fosters the way co-ops work together to address bigger challenges. While this principle applies to all types of cooperatives, it is especially relevant in the energy industry. In our case, we put this principle in action after major storms and disasters that cause widespread power outages. When this happens, we call on nearby co-ops to come to our aid and assist with restoration efforts—and we of course extend the same help to them when they need us. I can’t think of a better example of cooperation among cooperatives.

In addition, because we are part of the national electric co-op network, we can connect and collaborate with other electric co-ops to tackle industry-related challenges, like cybersecurity and an ever-changing energy landscape.

Concern for Community

The seventh principle, Concern for Community, is essential to who we are as cooperatives. We serve our local communities not only by being an essential service, but by helping to power our local economy, whether through economic development, volunteerism, or donations to local causes.

I believe you’ll find that most cooperatives bring good people together to make good things happen in the local communities. We hope you feel that way about us, your local electric co-op.

On behalf of everyone at Steele-Waseca Cooperative Electric, we’re thankful for your membership, and hope you have a safe and wonderful Thanksgiving holiday.

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Storage Water Heating Program

Benefits

Installing an electric water heater lets you enjoy the cleanest, safest, most efficient water heating system

The SWCE Storage Water Heater Program

  • SWCE will give you a FREE 115-gallon Westinghouse water heater
  • Water heater will be controlled from 7 AM-11 PM (Mon-Fri)
  • You will receive either the dual fuel rate (if on dual fuel) or a $10/month credit (when over 400 kWh are used)

Westinghouse Water Heater

  • Stainless steel tank with heavy-duty insulation
  • 115 gallon weighs 224 lbs. shipping weight
  • Dimensions 27″ x 70.5″
  • Industry best Lifetime Warranty when registered online within 90 days

How to Sign Up

  • Contact SWCE to pick up water heater and receiver
  • Homeowner or licensed contractor is responsible for picking up and installing water heater and receiver within 60 days
  • An affidavit is required by the state of Minnesota for all new wiring
  • Contact SWCE at 507-451-7340 to schedule a field check after it has been inspected by the state electrical inspector. Credits will not be applied until field check in complete
  • If longer than 60 days, member will be billed for the water heater and receiver

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Protecting against cyberattacks

Courtesy: Great River Energy (GRE)

The security of critical infrastructure is garnering increased attention following several recent notable cyberattacks.

The company that delivers nearly half the fuel used on America’s east coast needed to shut down the flow of oil, May 7, after its systems were compromised by a cyberattack. Hackers also gained access to SolarWinds, New York City’s Law Department, and California’s water supply.

“We’re seeing an increase in sophisticated hacking operations,” said Marc Child, the information security program manager at Steele-Waseca Cooperative Electric’s wholesale power provider Great River Energy. “In our partnership with the Department of Homeland Security, we’re hearing hackers likened to terrorists. It’s gaining national and international
attention especially among what we consider as essential infrastructure: electricity, banking, public works.”

Critical infrastructure companies, including our cooperative, are among the few that have mandatory minimum standards for cybersecurity. Their cybersecurity practices and procedures
are regularly reviewed and updated to ensure they’re effective against a cyberattack.

“At Great River Energy, we’re required by the North American Electric Reliability Corporation to ensure our cyber assets are secured,” said Child. “This means that we’re required to take
necessary steps to ensure the grid and our member data is safe and secure. Cybersecurity is critical to what Great River Energy does as it maintains and operates the grid.”

GRE has emerged as a cybersecurity industry leader, giving cooperatives a voice at the Department of Energy and sharing lessons learned with its member-owner cooperatives. Great River Energy facilitates collaboration on topics related to cybersecurity among its member-owners through an information-sharing team as well. Together, co-op representatives discuss their successes and opportunities in security practices. This allows all cooperatives to learn from each other and to enhance security practices. By working together and as part of a national effort, cooperatives keep the grid secure.

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