By Sean J. Vanslyke | firstname.lastname@example.org
Do you ever wonder why the power and internet goes out an a beautiful Saturday morning? A day with no wind, 78 degrees and birds chirping. Perhaps we could ask the driver of the vehicle that caused significant damage and outages at daybreak on Saturday, August 13 near Benton, Mo. Besides a broken joint pole (meaning a secondary utility company also had services attached to the pole), the vehicle hit hard enough to yank and break other items. Somehow the person and the vehicle disappeared before we arrived. There were parts and pieces of the vehicle left behind. We guess someone quickly pulled the vehicle away from the scene. If we could find the driver, we would bill their insurance company for more than $10,000 in damages and repairs. It took about eight hours to replace the pole and other materials. It was a blessing no one died.
Unfortunately, vehicle accidents are happening at an alarming rate. So, next time your power goes out when no storms are present, pray that no one is seriously injured. Remind your family not to text or watch TikTok and videos when they are driving. I am afraid we will see more and more of these accidents. The costs - of life and to the Cooperative's members - could be significant.
Be sure to watch your mailbox in October for your 2022 Capital Credit Power Perks check. Unlike investor-owned utility companies that strive to generate profits for shareholders, SEMO Electric operates on an at-cost basis. Any profits made by SEMO Electric are returned to the members through its capital rotation process. As of 2021, the Cooperative has returned a total of $16,792,257 in capital credits to member-owners. This year's Power Perks are from 1986 and 2021.
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 profit. This profit is “allocated” to electric members’ accounts as capital credits based on how much electricity each member uses and pays for throughout the year. The annual budgeting process is always a work in progress based on potential income and necessary expenses. As you know, weather plays a large part because we can't predict Mother Nature's actions. Hopefully, the information above helps explain why we return money on one hand and adjust rates on the other hand. It really is a serious balancing act that we actively manage as we provide essential services to you.
Fall is a busy time, and October is a particularly eventful month with school and community activities in full swing. It’s also when all cooperatives celebrate National Co-op Month. The word “cooperative” is close to “cooperation,” meaning people working together towards a common goal—mutually benefitting one another and the larger community. That’s the essence of the cooperative spirit. That spirit includes sharing best practices with other electric and fiber cooperatives to help them. For example, Team SEMO's Chris Freed and I spoke at the National Rural Electric Cooperative Association's (NRECA) 2022 Safety Summit in Austin, Texas. We were able to spend time with colleagues from across the country and bring new ideas home.
Team SEMO and our member-elected board members are invested in the communities where we live and the industry where we work. SEMO Electric is continuously examining ways to operate more efficiently while providing the highest level of friendly, reliable service you expect. After all, we’re your local co-op. We were built by the members we serve. Happy Co-op Month!
Book of the Month: “In every experience we create or encounter, we have the privilege of choosing our attitude and focus and determining what we can control or what we cannot control." Saturday Morning Tea by Tony Bridwell
Be smart. Act safe. #keeppushingforward
Sean is the CEO/GM of SEMO Electric Cooperative and GoSEMO Fiber.