Capital Credits
Craighead Electric Pays Capital Credits
The board of directors authorizes the return of $1,320,118 in capital credits to members
It’s time for you to get the credit—capital credits, that is—you deserve for helping build and sustain your local electric cooperative. As a member—and owner of Craighead Electric Cooperative we are returning capital credits for the year 1984 and 50 percent of 1985. If you received electric service in your name for this time period you will receive your check in the mail in late November 2011, based on how much you paid the co-op for electricity. If you are no longer a member of the cooperative and received a check in the last two years, you will automatically receive your check for the years designated. All other past members please contact Craighead Electric customer service at 870-932-8301 or toll free at 1-800-794-5012 to update your mailing information
For more information on this rewarding part of cooperative business, read the following Q & A:
WHAT ARE CAPITAL CREDITS?
Retained margins left over at the end of a year at a not-for-profit electric cooperative. Capital credits represent the most significant source of equity for Craighead Electric Cooperative. Since a cooperative’s “shareholders” are also the people the co-op serves, capital credits reflect each member’s ownership in the cooperative. This differs from dividends investor-owned utilities pay shareholders, who may or may not be customers of the utility.
WHERE DOES THE MONEY COME FROM?
Member-owned, not-for-profit electric utilities like Craighead Electric Cooperative set rates to generate enough money to pay operating costs, make payments on any loans, and provide an emergency reserve. At the end of each calendar year, we subtract operating expenses from the operating revenues during the year. The balance is called “operating margins.”
HOW ARE MARGINS ALLOCATED?
Margins are allocated to members as capital credits based on their purchases from the cooperative—how much power the member used. Member purchases may also be called patronage.
WHY DOES MY COOPERATIVE REFUND CAPITAL CREDITS?
Doing so follows one of our seven cooperative principles—Members’ Economic Participation. This principle states: “Members allocate surpluses for any or all of the following purposes: developing the cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership.”
DO MUNICIPLE OR INVESTER OWNED ELECTRIC UTILITIES REFUND CAPITAL CREDITS?
No. Capital credits only exist at not-for-profit electric cooperatives owned by their members.
ARE CAPITAL CREDITS REFUNDED EVERY YEAR?
Each year, the Craighead Electric Cooperative Board of Directors makes a decision on whether to refund capital credits based on the financial health of the cooperative. During some years the co-op may experience high growth in the number of new accounts added or severe storms may result in the need to spend additional funds to repair lines. Both events might keep member equity low, causing the board to defer any capital credits refunds. For this reason, Craighead Electric Cooperative’s ability to return margins to members in the form of capital credits reflects the cooperative’s strength and financial stability.
DO I LOSE MY CAPITAL CREDITS IN THE YEARS THE CO-OP DECIDES NOT TO MAKE REFUNDS?
No. All capital credits from every year members have been served by Craighead Electric Cooperative are maintained until such time as the board refunds them. Prior to this year, Craighead Electric Cooperative refunded all capital credits from 1937 through 1982.
HOW MUCH HAS CRAIGHEAD ELECTRIC COOPERATIVE PAID IN TOTAL CAPITAL CREDITS REFUNDS SINCE IT BEGAN IN 1937?
Craighead Electric Cooperative has paid $11,102,765.00 million in Capital Credits refunds to current and former members to date.
HOW OFTEN DO MEMBERS RECEIVE CAPITAL CREDITS?
The Craighead Electric Cooperative Board of Directors makes a decision each year by September whether or not to refund capital credits. When the cooperative is strong enough financially and the member equity levels high enough, the board directs staff to refund some portion of past years’ capital credits.
WHAT IF I HAVE MOVED?
If you move or no longer have electric service with Craighead Electric Cooperative, it is important that previous members keep their address current, so that future disbursements can be properly mailed. Capital credits are reserved for members even if they move out of the Craighead Electric Cooperative service area. Craighead Electric Cooperative will make a diligent effort to send a check by mail.
