Your Capital Credits Help The Co-op Grow, Stay Strong

One of the seven cooperative principles is members’ economic participation. What this usually means is that each member pays for their fair share of the cooperative’s energy service, since cooperatives don’t have stockholders to invest funds in hopes of a profitable return.
It also means that at the end of each year, once the books are closed and the bills are paid, all margins (the cooperative word for profits) remaining are allocated back to the members who purchased energy during the year.
The board of directors will authorize this allocation after the audit report is presented to them in late March, and you will find a notice of your share of the 2010 allocation on your May energy bill.
Once the margins are allocated, they’re called capital credits. Each member has a capital credit account for their unrefunded allocations. However, these capital credits have no cash value until the board of directors authorizes a capital credit refund.
Cooperatives typically hold capital credits for a period of time before repaying them for two purposes:
• as working capital to keep the cooperative financially sound and to allow for emergencies, such as a large storm which requires replacement of many poles and power lines.
• to reduce debt requirements for investment made in the cooperative's electric distribution system. This builds member equity in the co-op.
In the past 20 years, the board has authorized refunds totaling $6,146,822. This is your money, coming back to you after being used to build a strong, reliable electric system to build you and your neighbors.
During this past year, your board has attended educational programs on rates and equity management, to help them make the best decisions for the financial strength of HomeWorks Tri-County Electric Cooperative. From those programs came a new board policy spelling out a long-range financial management plan.
One of the goals of that plan is to rotate, or refund, capital credits on a 25-year schedule, as long as the other financial indicators are strong enough to allow it. A 25-year rotation is a common goal among electric cooperatives like ours.
When refunds are made, a larger share of each refund will likely come from the oldest capital credits on our books, from the mid-80s, with some going to our newest members, too. Rotating capital credits this way lets current member-owners pay their fair share of the cost of providing service, just as the older members did.
If the board does in fact authorize a capital credit refund at the March board meeting, you should see it as a credit on your May energy bill. Be sure to look for it, and be proud of your economic participation in your electric cooperative.