YVEA gives out record refunds to Northwest Colorado customers

Electric cooperative returning $3.2 million to customers

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At a glance

■ Yampa Valley Electric Association has more than 26,000 customers

■ In 1940, the initial board members drove from ranch to ranch to solicit members

■ The first line was energized on the day of Pearl Harbor, Dec. 6, 1941

■ The cooperative provided electricity to the rural areas of the county that never had it before, except through the use of a generator to charge batteries.

■ For the first dozen years, it extended service only in the rural areas. The cities of Craig, Hayden and Steamboat came into the fold in 1952.

— Northwest Colorado residents who were customers of the Yampa Valley Electric Association in 1995 will want to keep their eyes out for a pink envelope in the mail this week.

YVEA, one of Colorado’s rural electric cooperatives, is returning a record $3.2 million in refunds to its member-customers.

YVEA spokesman Jim Chap­pell said Tuesday that the typical refund for homeowners will be in the range of $40 to $80, depending on how much electricity the household used in 1995. This year’s refunds for 1995 usage represent 12 percent of individual electric bills for that year. Recipients of this year’s refunds also include commercial customers.

“There are going to be 11,608 of those checks going out,” Chappell said. “Of that number, 85 percent will be between $10 and $250. There will be 930 (checks) between $250 and $5,000 and 34 checks for more than $5,000 have been written. I won’t say who the largest are, but you can imagine the electric bills for customers like the ski area and the coal mines.”

YVEA purchases electricity from Xcel Energy and the Western Area Power Admin­istration to serve customers in all of Routt, most of Moffat and a small slice of northern Eagle counties. The service boundary extends 10 miles into Carbon County, Wyo., to take in the town of Baggs.

Chappell, who lives in Steam­boat Springs, said he has natural gas hot water and heat in his home and will receive a $55.55 refund check. A household that occupied a specific 1,800-square-foot home in Steamboat relying entirely on electricity for heat and hot water in 1995 will received a refund of $156 for its 1995 electric bill compared to $92 in 2009.

Chappell said this year’s refund checks represent each member-customer’s share of YVEA profits.

“Yampa Valley Electric is a not-for-profit cooperative where every customer is an owner of the business,” he said. “Any profits we make are allocated back to our members.”

The YVEA board of directors has the option of hanging onto the capital credits owed to the members of the cooperative to preserve working capital and liquidity. Although sales and revenues are down this year, Chappell said the board voted to return a large refund in part to infuse the local economy with some cash but also to begin reducing the current 15-year lag time checks are sent to customers.

Incoming YVEA board chairman Dean Brosious, of Craig, said the 15-year lag time has built up more cash reserves than the electric cooperative really needs — 72 percent of its total assets are in capital, meaning it has very little debt and ample room to leverage debt to enable major capital projects.

“Our percent of assets in capital is higher than it needs to be,” said Brosious, an investment adviser in his business life. “Looking at REAs (rural electric administrations) across the U.S., capitalization of 25 to 50 percent is considered good. Seventy percent is considered high.”

There was a specific reason why previous boards built up YVEA’s capitalization, Brosious said, but an evolving business strategy has led the board to take steps to shrink the lag time for returning profits to members of the cooperatives.

After YVEA was established in 1940, the board deferred returning any profits to its new members in order to build the association’s net worth.

More recently, for an expanded period of time, the board was eyeing the possibility of purchasing an interest in a coal-fired electricity generating plant as an alternative to purchasing electricity from Xcel.

“That would have been very expensive,” Brosious said. In order to entertain that step, the board needed to keep debt low and liquidity high.

Accordingly, it has returned a smaller percentage of profits to co-op members, while keeping the full amount of accrued profits on its balance sheet.

The board never saw an opportunity to buy a stake in a power plant that it deemed practical, Brosious said.

The current thinking is that with a growing movement toward big utilities developing alternative energy sources as a portion of their output, YVEA is not likely to buy into coal-fired generation.

Instead, it is taking steps to bring its capitalization back into a balance that is closer to what other REAs maintain.

Brosious, who has been on the YVEA board for five years, will be installed as successor to James S. Simos during YVEA’s annual meeting June 20. Lawrence Covillo is the president and general manager of YVEA.

— To reach Tom Ross, call 871-4205 or e-mail tross@steamboatpilot.com

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