Capital Credit Info

December 5, 2006

Dear UEC Member:

Umatilla Electric Cooperative is operated on a not-for-profit basis. Electric cooperatives, unlike investor-owned utilities, are owned by the members they serve. When you pay your electric bill, you are accumulating equity in your cooperative.

All funds collected above the cost of operation (called margins) are annually assigned to our members in the form of Capital Credits. Margins are the funds left over at the end of the year after all bills are paid. Each year the board of directors, which is elected by the members, reviews our financial position and determines the most financially prudent amount of capital credits to pay out.

Umatilla Electric is returning approximately $2.24 million to its members, which represents the remaining 10 percent of margins from 1988 and all of 1989. Members who purchased power during 1988 and 1989 will receive capital credits in proportion to how much they contributed to that year's margins.

Whether this capital credit refund is taxable generally depends on whether or not you claimed your 1988 and/or 1989 electric bills as a business expense. Most Capital Credit refunds for residential bills are not taxable; however it would be wise to check with a tax accountant if you are in doubt. If you no longer receive electric service from Umatilla Electric, please keep us informed of changes in your mailing address so that any future refunds will reach you.

If you have questions about your capital credits, please call the UEC office at 567-6414 in Hermiston or 481-2220 in Boardman. Our toll-free number is 1-800-452-2273.

Glenn Rohde, President
Umatilla Electric Cooperative Board of Directors