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FEC announces largest capital credit return

by Whitefish Pilot
| November 23, 2022 1:00 AM

Approximately $8 million will be returned to Flathead Electric Cooperative (FEC) member-owners via bill credits and checks in November and December. At its October meeting, FEC’s Board of Trustees retired $3 million of capital credits allocated to member accounts in 2008 and an additional $5 million of capital credits allocated in 2021, the largest capital credit retirement in FEC history.

Instead of focusing on profits, nonprofit co-ops focus on serving low-cost, reliable electricity to members while providing value to the community. When revenues exceed expenses, co-ops allocate those margins back to members as capital credits.

Co-ops hold on to capital credits for a period of time to fund long-term improvements to the electric system and to purchase supplies and equipment like transformers and bucket trucks. Essentially, the co-op borrows from itself and avoids paying interest on bank loans, which keeps electric rates lower. When the financial condition of the co-op permits, capital credits are retired and paid to member-owners as capital credit payments.

Typically, capital credits are returned to members after a period of several years. However, FEC’s trustees decided to return a percentage of last year’s capital credits due to a power rate refund recently received by FEC from its wholesale power provider, the Bonneville Power Administration (BPA).

“When we learned that FEC would receive a refund from BPA, it was an easy decision to get money back in the hands of our members,” said Board President Gary Boe. “By retiring 2008 and 2021 capital credits, we are able to get that done.”

Most of FEC’s electricity comes from hydropower sold by BPA. This year, a deep snowpack, a wet spring and a cool start to summer resulted in ideal weather conditions for prolonged hydropower generation in the Pacific Northwest. At the same time, other areas of the nation had an increased need for reliable power, and BPA was able to sell much of its larger-than-normal generation to those power markets. That combination resulted in lower-than-expected power costs for FEC.

FEC members who purchased electricity in 2008 and/or 2021 will receive a capital credit payment this year. Payment amounts differ among members because capital credits are allocated based on how much electricity each member purchased.

Most capital credit payments are now applied as credits to electric bills rather than mailed checks. This practice saves FEC members significant printing and postage costs and the extra step of depositing a check. This year’s capital credit payments will be applied to electric bills dated Nov. 15 through Dec. 10.

To learn more, please visit flatheadelectric.com/capital

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