ARAB, Ala. -- The Arab Electric Cooperative fixed a bookkeeping oversight, so that means hundreds of thousands of dollars are coming back.
General Manager Scott Spence says the oversight deals with excessive taxes paid to the state of Alabama.
Arab Electric is required to pay utility taxes to the state. Those taxes are calculated using the total electric sales reported by the cooperative and remitted to the state.
In 1997, the state was challenged regarding the collection of those taxes. That challenge was successful. That meant electric cooperatives were able to file for refunds of utility taxes paid on margins starting as early as 1995. But, Arab Electric Cooperative never did that. "So what we've done here is gone back for the past three years and recalculated the amounts that we've overpaid, and the state has agreed to allow us to get a refund for that portion," Spence explained.
He added they can only request the refunds going back three years. "We have asked for those monies to go back to our members here, and that will be approximately $230,000."
The exact amount of that total is $231,843.05. "Regulatory-wise we can't refund the money to members," Spence explained. They can use it for things like buying a new bucket truck and for other necessities that would have otherwise come out of higher rates.
"That helps us keep rates as low as possible, as long as possible by getting this money to come back home and to keep it here going forward in the future," Spence said.
Spence said they've put processes in place to file taxes this way moving forward. "So we're looking at roughly 75 to $80,000 of savings that our members will not have to fund through higher rates, because we can take advantage of this favorable tax treatment," he added.
The Arab Electric Cooperative is waiting for the Alabama Department of Revenue to approve the refund request. Spence expects the funds to come back within the next calendar year.