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How Your Co-op Works

Rural electric cooperatives, like West Central Electric, are non-profit, consumer-owned utilities that provide central station electric service to predominantly rural areas.

There are two types of electric cooperatives:

Distribution Cooperatives

Distribution cooperatives, like West Central Electric, provide electric service to the end consumer. They are owned and controlled by the members/consumers. Distribution cooperatives operate on a non-profit basis.

Generation and transmission cooperatives (G&Ts)

Generation and transmission cooperatives (G&Ts) are the other kind of rural electric cooperative. G&Ts operate the generating plants and electric transmission facilities that provide bulk power to distribution cooperatives. Rushmore Electric, Rapid City, SD is the G&T serving WCEC. West Central Electric owns its transmission lines and substations. Rushmore Electric is owned and controlled by eight western South Dakota co-ops.

During daily operations, an electric cooperative conducts business similar to any other electric utility. The difference lies in its ownership and how the wishes of these owners are carried out. Cooperatives are owned and controlled by the people they serve.

The Rural Utility Services (RUS) is a federal credit agency within the Department of Agriculture which provides credit and other assistance to rural electric cooperatives.

Cooperatives are Subject to Taxes

Rural electric cooperatives like West Central Electric are subject to the same taxes as any other business — including state and local taxes, through property taxes, sales tax, business franchise taxes, etc. They also are required by the Internal Revenue Service to pay tax on income from any unrelated business activity. However, due to their non-profit status, they do not pay state and federal income taxes.

The following breakdown shows the Gross Revenue Taxes paid by West Central Electric in 2014:

Haakon $55,344.37
Jackson $32,104.75
Jones $55,143.35
Lyman $129,570.95
Mellette $246.48
Stanley $15,166.26
Total in 2014 $287,576.16
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