Manager’s Message – August 2018
Down the Line
Dear Co-op Community Members:
Lane Electric Cooperative has been in business for nearly 80 years. You experience the “electric” part every day. How we go about the business of safely providing you reliable electricity is the “cooperative” part.
What does it mean to be a cooperative business?
A cooperative business generally forms to meet a local need. For- profit businesses only offer a service or good because it’s profitable.
Sometimes, consumers must collaborate to acquire a good or service by creating a member-based cooperative. Lane Electric formed in 1939 to bring electricity to the upper McKenzie River and Veneta areas after no investor-owned utility would do so. It simply wasn’t profitable enough, and it still isn’t.
A cooperative business is nonprofit. When it comes to this tax-exempt status under Section 501(c)(12) of the Internal Revenue Code, a cooperative must receive 85 percent or more of its income from members. The sole purpose of that member income must be to meet annual losses and expenses. In other words, Lane Electric doesn’t chase profits to grow the business. We grow the business for members to have affordable access to electricity in rural Lane County.
A cooperative business is democratically controlled. Periodic member meetings occur to elect directors to the board of directors on a one-member, one-vote basis. Sustaining democratic governance requires a good functioning relationship between the board of directors and the general manager. To maintain checks and balances on certain democratic functions, members sometimes participate in co-op committees. Lane Electric’s Nominating Committee, and Elections & Credentials Committee are two examples of members ensuring our democratic processes serve the membership. Please contact me about participating on a member committee.
A cooperative business operates at cost. A cooperative cannot operate for a profit or below cost. There’s a sweet spot between those two extremes called operating “at cost.” At the end of the fiscal year, excess operating net revenues are allocated back to members according to the amount of electricity used by each member. As a cooperative member, every year you are credited an allocation of any excess net revenues—capital credits—to ensure the co-op hits that sweet spot.
Finally, a cooperative is a grassroots organization. It’s not “the government.” It’s all of you, together. It’s consumers collaborating to plan for and meet local needs. That sounds like simply being neighborly. A cooperative business takes being neighborly to the next level.
Matt Michel, General Manager
