Would you like to get a check from your electric utility instead of sending one in every month? Get ready. Buckeye Rural Electric Cooperative members will enjoy one of the advantages of the cooperative business model in 2007 when capital credits are retired according to a formula that’s been modernized by the Board of Trustees.

Patronage capital checks will be issued this year by BREC based on a total retirement of $700,000 from three business years, including 2005. Members of record during 2005 will be part of the disbursement of capital credit payments from margins logged during that year. In addition, the co-op will retire over $226,000 in margins from the years 1974 and 1975.

Over 18,000 current and former co-op members will receive checks in amounts ranging from $10-$100. Notices will be sent beginning in April with a card to be returned to BREC requesting payment. Mailing of notices will correspond to the co-op’s four billing cycles. Checks will be written each month as the notices are returned. It is expected that the retirement program will take 4-6 months to complete.

Capital credit totals less than $5 per account will be carried over to the next retirement cycle or applied against a final electric bill.

David Lester, president of the BREC Board of Trustees, said the co-op’s Capital Credit Committee met and advanced the idea of combining the traditional FIFO (first-in, first out) method of retirement with a current year percentage retirement so old and new members can benefit.

“Being a cooperative member means each of us is an owner of this business and eligible to share in its margins when financial conditions permit,” Lester said. “We feel that the accrual and eventual payment of patronage capital is a duty to our membership and a means of showing what makes electric co-ops different from other types of utility businesses.”

Capital credits are margins in excess of expenses, similar to profit in the investor-owned business world. Each member’s capital credit account is scrupulously accounted for on an annual basis. Traditionally, retirements have been made in two ways: net present value payments to estates or 100-percent retirements based in FIFO calculations.

A new strategy has developed in recent years, allowing co-op members to share on a percentage basis in current- or recent-year margins.

“The BREC Board decided it was a good idea to incorporate a percentage-basis, recent year retirement with the traditional FIFO formula used in the past. Not only does this mean more members will receive checks, it rewards current members for their contribution in capital through the rates they pay,” said Executive Vice President and General Manager Dennis Beard.

“Co-op staffers and the Capital Credit Committee studied this combination of retirement methods for almost a year before making the recommendation. The fiscal mechanism was worked out and has now been incorporated in the 2007 budget, clearing the way for the checks to be written and mailed around mid-year and continuing into the fall,” Beard added.

Notices will include the amount of the capital credit payment due.

Steve Oden, vice president of Member Services, asks that co-op members be patient and wait until they receive their notices.

“Please don’t call the office unless you believe there was a problem with delivery of the notice. An announcement will appear in ‘Country Living’ magazine each month about the parts of the service area where notices will be mailed next. We also plan to set up a separate capital credit hotline to assist with inquiries,” he said.

“This is good news for all members of BREC, but getting checks to over 18,000 people will take several months.”

Why did BREC’s Board of Trustees decide to retire a percentage of 2005 capital credits?

• The percentage method allows all co-op members, regardless of age or time on the lines, to share earlier in their patronage capital.

• The percentage method recognizes the current higher contribution to equity made by co-op members through the electric rates they pay.

• Electric use has grown and is expected to continue to grow. Higher electric sales produce faster capital credit accruals.