Returning Capital Credits Quicker Than Before
As we look to the future and launch brand-new initiatives, Dakota Electric’s core values stay true — provide members with outstanding electric reliability and quality service at a competitive rate. These pillars guide the strategic plan approved by our board of directors and on-going service provided by our employees.
One benefit of being a member at Dakota Electric means you get a portion of the cooperative’s margins. When Dakota Electric’s annual revenue exceeds expenses, it allocates margins — or capital credits — to members based on their annual electric bill. Based on financial conditions, the board approves payment of past capital credits to members. Sound financial decisions made over the years at Great River Energy, our power supplier, are now adding to the amount of capital credits we can return to our members.
A few years ago, Dakota Electric was on a 27-year rotation for returning capital credits. During the cooperative’s 2019 strategic planning review, the board of directors decided to accelerate our capital credits pay-back program and set a goal to achieve a 15-year rotation by 2025.
How does this affect our members?
While Dakota Electric may allocate capital credits to members each year, the money is not paid out right away. Capital credits provide equity for the cooperative to reduce borrowing and interest payments — keeping rates as low as possible. When Dakota Electric’s board approves the payment of capital credits each year, they retire the oldest capital credits first.
To enhance the value of cooperative membership, the board made the significant strategic decision to speed up the capital credit retirement cycle by paying out 12 years of credit, a projected $22 million, in five years. To reach this goal, the board of directors approved the annual payout of $4.4 million in 2020.
Capital credits reflect just one advantage of being a cooperative member — we share our profits with you because we do not have outside stockholders. Over the next few years, more of our members will begin experience this benefit of being a member-owner at Dakota Electric.