Capital Credits are one of the biggest differences between electric cooperatives and other utilities. Instead of returning our annual margins (profits) to shareholders, as the for-profit utilities do, CoServ and other electric cooperatives allocate this money back to our Members in the form of Capital Credits.
How do Capital Credits work?
- Money comes in (operating revenues) each month from Members when they pay their electric bills. Included in each payment is your contribution to the day-to-day operation costs of your electric cooperative.
- That money is then invested in equipment and manpower (operating expenses) needed to meet the current and growing demand for electricity and improve and maintain the distribution system and minimize the money that CoServ would need to borrow. Members can think of it as their equity investment in the Cooperative.
- Each year, annual margins (excess revenue) from the previous year are divided proportionally among CoServ Members based on their annual energy purchases. CoServ maintains capital credit accounts for each Member until the credits are retired (paid) in full.
The amount you pay for electricty each month.
The cost to maintain and deliver reliable electric service.
The margin after all expenses are paid is divided proportionally among CoServ Members.
- Your Board of Directors reviews company finances, and when our financial condition permits, the Board may retire (pay) a portion of the Capital Credits to our Members based on their allocated share. All eligible active Members will receive a credit on their bill. All eligible former Members will receive a mailed check.
What's the difference between Allocations and Retirements?
The difference between Allocations and Retirements can be confusing. Below we break down each one.
|What||Excess margins are divided proportionally based on the Members energy purchases for the allocation year and added to the Members Capital Credit account.||Because we are a cooperative, once operating costs and capital expenditures have been covered, the Board may vote to retire excess margins that have been previously allocated to the Members.|
|Who||All Members that are active during the allocation year.||All active or former Members who have remaining Capital Credits.|
|Where||Active Members will receive notification of their allocation amount on their bill in the message center. Former Members that were active during the allocation year will be notified of their total via mailed letter.||All eligible active Members will receive a credit on their bill. All eligible former Members will receive a mailed check.|
|When||Allocations are processed once a year, typically in the spring.||At the discretion of the Board, Retirements are typically processed once a year and returned in the summer or fall.|
|Why||Allocations and Retirements are benefits of being a CoServ Electric cooperative Member.|