Understanding Deferred Revenue // July 2026 CEO Column

I’d like to provide some information on how we determined this year’s capital credit allocation, which can be found at the top of this month’s statement. 

Capital credits are determined by the margin (revenue remaining after expenses) the cooperative has at the end of the year. This amount is then allocated to members based on their share of revenue if conditions are favorable. Following this process, and for the first time since 2012, there was no LREC operating margin available to allocate for 2025. That being said, our Board of Directors was able to approve an allocation of $3.57M from our wholesale provider Great River Energy.

Why? Several factors contributed to this decision, including rising operating and maintenance costs which reduced our year-end margin. In 2025, we utilized the remaining deferred revenue balance, helping us maintain positive financial results. Deferred revenue refers to excess funds that contribute to an organization finishing the year with a larger margin than initially planned. At the Board’s discretion and depending on our needs, the cooperative can “push” these excess funds into the future to help offset anticipated costs instead of using them in the current year. To learn more about our capital credit process, visit our Capital Credits FAQs.

I encourage members with questions about deferred revenue to contact me directly. Capital credits are a valuable demonstration of our members’ economic participation, and I am here to help with any questions you may have.

Cooperatively yours,

Joel Janorschke, CEO