Why does TVA Oversight Make a Difference?
I wanted to take this opportunity to discuss how our wholesale power contract distinguishes us from other electric cooperatives. Marshall-DeKalb Electric Cooperative is one of 153 local power companies distributing TVA power.
Most of the time, electric cooperatives and other cooperatives give back something known as capital credits, the “excess funds” that should be returned to their members. TVA makes us different in that our wholesale power contract does not allow for capital credit refunds to be issued to our members.
Capital credits are paid when a cooperative brings in more revenue than it spends during the year. Back in the 1930’s, the Tennessee Valley Authority Act created TVA and allowed electricity to be brought to rural areas of Alabama. As TVA signed contracts with power distributors, including cooperatives like Marshall-DeKalb EC, they decided not to let distributors refund money to members, instead letting them re-invest any excess revenue back into their electric system instead of paying capital credits and giving us the ability to either lower or avoid raising rates when possible. When a cooperative returns capital credits, that is less money that the cooperative must invest into its system, and it is money that must come from somewhere, either in the form of increased rates or increased debt, or both.
“As a TVA power distributor, we cannot refund capital credits. We strive to re-invest excess revenue back into the electrical system to improve reliability while doing our best to hold down rates. We continually work to improve technology, substations, lines, poles, transformers, and other equipment and to improve right-of-way and grid integrity. All the while trying to keep our cost down,” said Marshall-DeKalb General Manager Scott Bobo.
Marshall-DeKalb EC does not have a large cash reserve or an undue debt burden. What we strive to have and continue to work to improve is a reliable, up-to-date electric system that will be readily available to serve our members for many years ahead.