ST. MARYS — After paying back nearly $1.5 million to members late last year, Midwest Electric is returning another $1 million in patronage cash back to members in late March due to having a strong financial year. Checks will be mailed March 21, with the average residential member receiving a $71 check.
Last November’s $1.5 million was paid out to members in the form of bill credits via the cooperative’s general patronage retirement — the margin between income and expenses that is paid back to members. This is what makes the not-for-profit cooperative business model different from other utilities. But this month’s extra payment is separate, resulting from high margins (the cooperative word for profit) in 2018.
According to CEO Matt Berry, the cooperative budgeted $2.6 million in margins for 2018, but due to high sales and lower expenses, the actual margins came in at $3.6 million. As a not-for-profit electric provider, Midwest Electric needs to generate a small margin to help fund electric system reliability upgrades (such as replacing poles and lines), but the cooperative’s strong position allows it to do both — invest in the future and give back to members.
“Those margins still belong to you, the member-owners,” Berry said. “Coming in over budget, we could’ve just kept it at that and returned the $3.6 million to members at a later date. But since we have a healthy equity position and returning a portion of that now will not impact electric rates, we decided to go ahead and return $1 million now rather than run our 16-year patronage cycle and wait until the year 2034.”
Berry notes that 2018’s margins resulted from sales being much higher than expected due to weather and expenses being lower. The cooperative has not had a rate increase since 2010.
This month’s special payment is for those who were members in 2018 and is based on the amount of electricity used in 2018.
The average residential member will receive $71. Amounts under $20 will be a bill credit on the March electric bill.
The average small commercial member will receive $631.
Large commercial accounts will get thousands of dollars back.
“Patronage cash back is an example of the cooperative difference,” Berry said. “You won’t get this from an investor-owned utility like AEP or DP&L, nor from municipal electric utilities. Only electric cooperatives have this unique member-owner aspect and all the benefits that come with it.”
Since Midwest Electric’s last rate increase nine years ago, the co-op has invested more than $17 million in electric reliability upgrades and returned $11 million in patronage cash back.
“Thank you to all our employees for their high level of productivity and efficiency to make this happen,” Berry said. “And to our board of directors, who ultimately made the decision to do this special cash back event. We hope all members enjoy this perk.”
Visit www.midwestrec.com/patronage-cash-back to learn more.