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Decatur County REMC Loves Surprising Its Customers with Refunds

Whether you rent an apartment, own a home, or supervise expenses for a business, electricity and other utilities are a part of the monthly overhead. Most of the time, the expense is consistent, planned for, and budgeted, and you pay little attention to it. What you don't expect is for the electric company to issue a refund. But the Decatur County REMC of Greensburg, IN (which serves 8,000 members, in parts of Decatur, Ripley, Jennings, Franklin, Rush and Bartholomew counties) loves to "surprise" its customers with refunds.  And even industrial customers are now receiving capital credit cash back from their electric utility, as one large energy user was happy to learn.

It's an open secret that REMCs are not profit driven, but operate on a customer-owned model. The businesses and homes receiving electric services are not just customers; they're owners and investors in the company. As a result, a cooperative’s positive financial margins from electrical service are eventually returned to customers in the form of an payout called a capital credit.

In spite of best intentions, these payouts don't necessarily happen every year. Local electric cooperatives have an annual operating budget that considers much more than employee salaries and standard upkeep. Co-ops in many service areas, especially those experiencing rapid growth, require considerable capital re-investment for new or upgraded equipment to meet their customers' electric service needs. While most budgetary needs are predictable, others are not, such as major storms or an influx of new customers moving into the service area. Nevertheless, over the last several years, Decatur County REMC has set its mind to issuing capital credits to its customers every year, and in the vast majority of years, they've succeeded.

Decatur County REMC issues, on average, a capital credit payout to all its members that equals 2 - 4% of their annual electrical usage. These credits are retired on a 25 year cycle, so the payments received this year represents the member's electricity refund from 25 years ago. As a result, "Many individuals and businesses did not get a payout this year because they were not in our service area in 1990," said Jim Wittman, a Hoosier Energy employee who serves as the Key Account Manager for Decatur County REMC and five other electric cooperatives. "Others are surprised because the payment was calculated from a 'boom' year of great growth, or a business may get a payout from an early year that doesn't account for expansions." Generally, private home owners, while pleased to see a payout, have less to puzzle over, as electrical usage remains relatively stable from year to year.

"Not all REMCs are able to reward their members with a check in any particular year," said Wittman. "Decatur County likes to pay their members back every year. It differentiates the cooperative from other forms of utilities. We’ve issued a payback in roughly seven of the last ten years." The Decatur County REMC board analyzed their financial numbers for 2014 in January 2015 and voted to issue a payout. Checks for residential customers arrived in the mail shortly afterwards. Meanwhile, Wittman and Decatur County REMC General Manager Don Schilling traveled to key corporate consumer-members throughout February to personally present checks on-site. Schilling said, "It's a little easier to explain the situation face to face." Wittman notes, "In Greensburg, which is a heavy manufacturing area, we have several companies with long histories, so they've come to anticipate it."

One such company, Valeo Engine Cooling, opened its plant in Greensburg 25 years ago. The plant manufactures radiators and condensers for new automobiles. Valeo has grown steadily, and now employs 700 people. Valeo received its first capital credit this year. Cost Savings Manager Dick Glaser, who's been employed at the plant since it opened, recalled, "Jim (Wittman) called and said that they were bringing a check over. I had no idea what for. We're handling the payment like 'found money.' The checks will only go up because of our growth since 1990."

Glaser works very closely with the REMC. "We have a good relationship and they were very helpful on two cost-savings projects."

General Manager Schilling says Decatur County REMC started making a special effort to pay back capital credits on a regular basis in 1984. "Usually when we can't offer a payback, we've had some unplanned expenditures. When we do our financial forecast, we try to roll in everything we can predict so we can meet our goals without overdoing it. Most years we're not too far off. Then we can schedule another set of onsite visits, which are a great chance to ask our customers how we're doing, and emphasize that we're here to provide service, not just make money." Learn more about Decatur County REMC at http://www.dcremc.com/