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Capital Credits

Craighead Electric Pays Capital CreditsGraphic How Capital Credits Work

The Craighead Electric board of directors has authorized the return of $1,479,839.07 in capital credits for years 1991 and 1992. If you received electric service in your name in these years, you may be owed a monetary credit based on how much you paid the co-op for electric service during the same period.

The best way to ensure that you receive the credits owed you is to keep your mailing address current. To check or update your current mailing address with us, please call Craighead Electric member services toll-free at 1-800-794-5012. Even if you are no longer a member of the cooperative, you will receive all capital credits owed to you as long as your mailing address remains current.

So what are capital credits then, anyway? Capital credits are retained margins left over at the end of a year at a not-for-profit 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. Municipal or investor-owned electric utilities DO NOT refund capital credits; only not-for-profit electric cooperatives owned by their members (like you) return these credits.

Capital credits come from electric co-ops, like CECC, setting rates to generate enough money to cover operating costs, pay bills, and create an emergency reserve. At the end of each year, these expenses are subtracted from that years’ operating revenues and the balance is allocated to members as capital credits. How much each member receives is based on how much power the member purchased during the year returned.

Each year the decision to pay capital credits is decided by the Craighead Electric Cooperative’s board of directors, 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.

Members will not lose capital credits. All capital credits from each year that 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 its founding in 1937 through 1990.

Refunding capital credits expresses one of the seven cooperative principals—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.”

Members who received service in 1991-1992 will receive a check in the mail in November unless the total amount of the refund is less than $5. Due to the expense of processing and mailing checks, if the amount of the refund is less than $5.00, it will be credited to the member’s December 2016 electric bill.

With the returning of $906,772.22 from 1991 and $573,066.85 from 1992, Craighead Electric Cooperative has now returned $17,708,190 to current.

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