One particular event is circled on the calendar of every co-op member: patronage capital day.
Great River Energy’s 26 member-owners each received a cash payment from Great River Energy on March 26 — $5 million total.
“As a cooperative, we operate our business at cost, collecting only what we need to serve our members and meet our financial obligations,” said Great River Energy Vice President and Chief Financial Officer Michelle Strobel. “Over time, we return those dollars entrusted to us by our members in the form of patronage capital payments.”
Cooperatives hold on to allocated capital credits to cover emergencies and make necessary enhancements to their electric systems. Retained capital credits also strengthen Great River Energy’s balance sheet, an important component of maintaining its investment grade credit ratings.
Great River Energy’s board of directors set a target to maintain an equity to capitalization ratio of 20%. Patronage returns are then made in the form of cash payments from equity levels above the set target.
Returning patronage capital is a component of the cooperative principle known as “members’ economic participation.” Members contribute equitably to, and democratically control, the capital of their cooperative. Cooperatives allocate surpluses for a variety of reasons, including periodic cash returns.
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