January 2016 Back Page — A Message From Meera about Patronage Capital.Posted: January 7, 2016
If you were a member of AVEC in 1991, you should have received a check from us right around Christmastime. Why did you receive that check?
As you know, you are a member of a cooperative. Your electric bill pays for our costs to serve you—and a little bit more.
We are required by our lenders—the federal government and our bankers—to set our rates to ensure that we generate enough revenue to not only pay for all operating costs, but also to build and maintain owner’s equity in the system. As a result, in most years we make what would be called profits in a for-profit company. In such a business, the profits essentially belong to the owners or shareholders. In a cooperative such as AVEC, those profits belong to you—the owners of the company.
We maintain records that show exactly each member’s share of each year’s profits—what we call margins. When our board determines that we have enough cash to return some of those margins, we send out checks or credit member’s accounts.
Earlier this year, the board decided to return one-fifteenth of our total accumulated margins to you—about $1.65 million. With this payment, we have returned a total of $20 million to you since 1990. We will still have $23 million in unpaid patronage capital, which is leveraging $127 million in total assets.
I hope you are as proud of AVEC as I am. We are a little company with a huge job that was given a 5 percent chance of survival when we were established in 1968. Now we serve 56 communities and are considered a model for how to provide electric service in rural Alaska. You, our members, have made that possible. Thank you!
All of us here at AVEC wish you a very happy and prosperous new year!