Power Perks Checks Arriving in October

SEMO Electric Cooperative's Board of Directors approved the return of $1.5 million to members as part of the Cooperative's capital rotation process. This year's credits or "Power Perks" include 100% of 1986 capital credits and 15% of 2022 capital credits. Members should watch their mailbox in October as "Power Perks" checks will be mailed to members’ most current address listed on the Cooperative’s records. If the amount is $10 or less, the amount will be carried over to the following year.

Power Perks, also known as capital credits, are a unique feature specific to the cooperative business model. As a not-for-profit organization, SEMO Electric does not raise capital from outside shareholders or investors. Capital credits are primarily used by SEMO Electric to fund long-term capital investments, such as new electric facilities, electric system upgrades, and equipment. Capital needs are funded from just two places: capital credits and long-term debt. While SEMO Electric could incur debt for 100% of its capital needs, this would result in additional interest expense that SEMO Electric would need to recover through increased electric rates. Likewise, SEMO Electric could fund 100% of its capital needs through capital credits; however, this too would result in increased electric rates.

An underlying principle of the cooperative business model is to strike an appropriate balance between capital credits and debt. Over time, capital credits are returned to members on a first-in, first-out (FIFO) basis plus a percentage of the most recent year. At the end of each year, SEMO Electric’s financial statements show whether revenue exceeded costs and resulted in a margin. This margin is “allocated” to electric members’ accounts as capital credits based on how much electricity each member uses and pays for throughout the year.