It is our pleasure to announce that your cooperative is providing a small boost for many of you in the form of capital credits. Capital credits are unique to the cooperative model, so we would like to take a moment to help our members better understand how they work.
In short, capital credits are a reflection of your ownership in this cooperative. Unlike investor-owned utilities that return a portion of their profits to shareholders, CEC operates at cost. This means that when we bring in more money than we need to cover the costs of operating and maintaining our electric system, we don’t send money to stockholders who may or may not live in our service area. Instead, we allocate those leftover funds, known as margins, to our members based on how much electricity they purchased during a given year, and we periodically retire a percentage of these as capital credits to our members.
Each year, the CEC board makes the decision whether or not to retire capital credits based on the financial condition of the cooperative. In years when there has been high growth in the number of new accounts or severe weather that requires rebuilding lines, the additional costs these incur might lead the board to decide not to retire capital credits. As a result, you can view CEC’s ability to retire capital credits this year as a sign of the cooperative’s financial strength and stability.
It is important to note that capital credits are not necessarily for electric purchases made the previous year. The capital credits allocated for each year members have shared ownership in CEC are maintained until the board elects to retire them. So if the board retires capital credits from past years, even former or inactive members of the cooperative may receive a check based on their usage for that year as long as they are in good standing with the co-op.
This year, CEC retired approximately $2.5 million in capital credits to our members. Most members will receive a credit on your bill this month based on your previous purchases with the cooperative. Originally, CEC was planning to issue checks for amounts exceeding $30 to active members, but due to the COVID-19 pandemic, the accounts were credited instead. The amount of the retired capital credits is based on a percentage of the member’s total accumulated capital credit balance. The amount retired this year is subtracted from the total amount allocated in previous years. The retirement will be made from the capital credits of record assigned to your account.
If you have questions about capital credits, please feel free to contact CEC for more information. It is always a privilege to serve this community, but we take that responsibility even more seriously during these uncertain times. We know how essential reliable electric service is to you and your loved ones. We will continue to work hard every day to make sure our community has the service it needs.