Message From the CEO
Patronage returned in October 2023 and June 2024
Patronage dividends are one of the most unique and rewarding benefits you enjoy as a member of East-Central Iowa Rural Electric Cooperative. With the current positive financial outlook, your Board of Directors has elected to retire $602,382 to our members, which represents 100% of our 2009 allocated patronage dividends, 12% of our 2010 allocations, and 10% of our 2015 allocations. Over two-thirds of this year’s retirement was returned to our current members via a credit on their June energy bills. Last fall, your Board of Directors also approved retiring $453,324 (100% of our 2008 allocations). In the past 10 years, your Cooperative has returned over $5.3 million to our membership.
Unlike investor-owned utilities that maximize profits to pay dividends to shareholders, not-for-profit electric cooperatives provide members with “at cost” electric service. At the end of the year, after all operational expenses have been covered, a portion of any excess funds are allocated back to the members in the form of capital credits. Before allocating and retiring the capital credits, the Board must consider the financial condition of the cooperative and the need for capital funds for the upcoming years. Patronage dividends may not be retired every year. In the case of last year (2023), your Board of Directors elected to delay retiring patronage dividends until the fall as opposed to the usual summer timeframe.
Why the Delay in 2023?
If you recall last year, I addressed the need to delay retiring patronage dividends to the membership. Your Cooperative delayed increasing electric rates, which significantly lowered our cash position. While your Cooperative has a strong financial position, controllable expenses for 2023 rose by 11.66% and fixed expenses rose by 6.09%.
The expected increase in the cost of power did not materialize (costs ended up being 2.05% below the previous year). This cost of power decrease was passed on to our members. We expected an average Energy Cost Adjustment (ECA) factor of $0.01225/kWh, but the actual ECA factor for 2023 was less than half that projection ($0.00613/kWh). As a result, your Board of Directors approved the retirement of 2008 allocations in October.
Outlook for 2024
While it is too early to predict the outcome for 2024, your Cooperative’s financial condition continues to be strong. It’s been just over a year since the rate increase, and our cash position has improved. With these positive indicators, your Board of Directors wanted to resume our normal schedule of retiring patronage to our members in June.
In closing, we extend our heartfelt thanks to all our members for your understanding and patience as we navigated the delay in retiring patronage dividends. Your unwavering support has been instrumental in allowing us to maintain our commitment to keeping the lights on and providing reliable service to you.