LCEC returns millions to customers via equity distribution
May 31, 2011
Earlier this year, the LCEC Board of Trustees approved an $8 million general equity distribution. This was in addition to the decision to not raise base rates for the third year in a row and a final equity return of $6.1 million to accounts that have been closed since 2003.
Last year, LCEC returned more than $13 million to active and inactive members. Over the years, LCEC has returned more than $178 million in equity to its customers.
Electricity is often taken for granted but if you were a resident of North Fort Myers 71 years ago, chances are you didn’t have electricity. At that time, no power company was willing to pay the expense for extending power lines to remote areas of Southwest Florida. There was; however, an orange grove owner who had built his own generating station to run his business. In 1940, he sold it to a group of his neighbors who shared the cost, borrowed money from the Rural Electrification Administration (REA) and formed an electric cooperative — LCEC. Each customer of the cooperative was a member, just as today.
LCEC’s mission remains the same as it was back then — to provide efficient electricity at the lowest possible cost.
Cooperatives do not exist to generate profit. However, LCEC does generate “margins,” from excess revenue. Margins are allocated to customers in the form of equity. Each customer receives a portion of equity, based on how much revenue they put into the organization. LCEC retains a portion of margins each year as a source of financing infrastructure and increasing the efficiency and reliability of the system.
Annually, LCEC management and the Board of Trustees review net margins and strategically calculates what portion should be returned to customers, what portion will be utilized for investment in the cooperative and the amount needed to meet financial requirements from lenders.
Equity equals financial strength for LCEC and its customers. It allows for improvements in delivery of power and service through capital projects without taking out costly loans. LCEC is proud of the financial strength that has allowed equity to be returned to customers again in 2011. It’s one of the benefits of belonging to a financially stable electric cooperative. Not all of the 900 electric cooperatives in the United States are able to return equity to customers.
LCEC is a not-for-profit electric distribution cooperative serving Sanibel and Captiva Islands, Cape Coral, North Fort Myers, Marco Island, Pine Island, Everglades City, Immokalee, Ave Maria and parts of Lehigh Acres. For more information, visit www.lcec.net.