Special Capital Credit Retirement

One of the best things about Otero County Electric Cooperative (OCEC) is the members we serve. As a cooperative, we are in the business of serving you. The moment you start receiving electric service from OCEC you become a member and part owner of the cooperative. The financial decisions made by your board are not made to satisfy invisible investors or generate profit, but to serve members and our communities. It is part of what makes cooperatives different from investor-owned utilities.

Because we are a cooperative, our margins are allocated to members in the form of capital credits, also known as patronage capital. Capital credit allocations occur annually and are based on each customer’s contribution to revenue during that year. Your Board of Trustees analyzes the association’s financial position and determines whether we can retire capital credits, and if so, how much to retire. Generally, the board’s goal is to retire 1/35 of unretired allocations. If patronage capital is retired, it is typically retired for the oldest allocated balances first.

In the initial stages of the COVID-19 crisis, the Small Business Administration offered Paycheck Protection Program (PPP) loans to help businesses affected by the economic slowdown associated with the pandemic. The Board had a lengthy discussion on whether it was in the best interest of the cooperative to apply for this money. With so many unknowns at the time, we applied for this funding. Upon approval, OCEC received $1.27 million in PPP funds. Subsequently, we requested and received forgiveness of that loan in 2021. As it turned out, operations continued much more normally than expected. We didn’t have a loss of sales and bad debts did not increase as much as we anticipated, leaving OCEC in good financial standing at year-end.

With the forgiveness of the PPP loan and OCEC having strong operating margins, the Board seized a rare opportunity to do a special retirement of capital credits. And we wanted the benefit to go to those affected at the time the forgiveness occurred. This will be the first time in co-op history that funds will be retired using the LIFO (last in, first out) method. Members who received electric service from OCEC in 2021 will receive a special capital credit retirement check, which is separate from the normal capital credit retirement check members from the late 1990’s will receive.

Members who attended the 2022 Annual Meeting were able to pick up capital credit checks in person. The checks that were not picked up will be mailed out later this month. Keep an eye on your mailbox for yours.