At the November meeting, the Basin Electric Board of Directors authorized the retirement of $48.9 million in patronage capital, approximately 1/30 of the cooperative’s patronage balance.
Chris Johnson, Basin Electric senior vice president and chief financial officer, noted that the board considers the cooperative's liquidity position, bond ratings, and future amount of debt and margin needed to support growth when determining the amount of patronage capital to distribute.
"Patronage capital rotation is one of the key foundations of the cooperative business model," said Johnson. As a not-for-profit organization, Basin Electric operates on a cost-effective basis, eliminating the need to generate excess returns on equity. Any margins earned that are not distributed to members become patronage capital, which serves as the cooperative’s principal source of equity for funding growth.
The board’s action brings the amount returned to members in the past three years to approximately $138 million in patronage capital retirements.
Johnson said members received official notice of their share of the patronage capital retirement in November, which was determined based on their power purchases during portions of 2008 and 2009. The patronage capital retirements were distributed in December.
