Each year, the board and management examine our financial stability, including what we need for things like wholesale power, poles, wire, and equipment. We want to meet certain financial goals before returning capital credits.
Fluctuating fuel prices, system growth, government compliance, financial institution compliance, inflation, interest rates, and weather events can affect margins. When these extenuating circumstances occur, capital credit payments may be delayed. Capital credits are not lost, when the conditions change the board can allocate capital credits in future years.
No. Instead, that money is to benefit members by helping keep rates as low as possible. This has allowed our rates to be competitive with surrounding utilities, even with the high inflation that we have experienced over the past several years.
The money is used to fund operating expenses, plant improvements and technology. It reduces the need for us to borrow money on your behalf. Even though you don’t receive the margins as soon as they are earned, it does help you by keeping your cost per kilowatt hour low and helped us save money on interest from borrowed money. Fluctuating fuel prices, system growth, government compliance, financial institution compliance, inflation, interest rates, and weather events can affect margins. When these extenuating circumstances occur, capital credit payments may be delayed.
No, they do not. Capital credits are only earned and allocated for years in which we earn excess margins. Although, in most years we earn a positive margin.
The amount of capital credits is assigned to members based on how much electricity they used during the year the margins were earned, and whether their sales price per KWH was higher than costs per KWH.
Other businesses return their profits to stockholders. Cooperatives are different. In our case, profits are reinvested in plant and technology. Periodically, as our directors determine it is financially prudent to do so, we give this money back to our members. Capital Credits are part of the value of our member’s cooperative membership.
As a cooperative owned by our members, our excess revenues are called margins. Margins are what is left over after all bills are paid at the end of a particular year. In other words, when revenues exceed the cost of doing business.
