|Published:||Aug 04, 2010 7:43 PM EDT|
|Updated:||Aug 04, 2010 4:44 PM EDT|
LEE COUNTY, Fla. - In 2010, the LCEC Board of Trustees approved a $7.6 million general equity distribution. This was in addition to the decision to not raise base rates for the second year in a row and a final equity return of $5.8 million to accounts that have been closed since 2002. Over the years, LCEC has returned more than $150 million in equity to its customers.
Electricity is often taken for granted but if you were a resident of North Fort Myers 70 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 reviews 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. “At LCEC, we are proud of the financial strength that has allowed us to return equity to our customers in 2010. It’s one of the benefits of belonging to a financially stable electric cooperative,” Chief Financial Officer Denise Vidal said. “Not all of the 900 electric cooperatives in the United States are able to return equity to customers.”