It’s time for you to get the credit —capital credits, that is― for helping build, sustain, and grow your local electric cooperative. Tri-County Electric Cooperative retires capital credits (also known as patronage credits) to members each year in July at our Annual Meeting of Members.
When you signed up to receive electric service from Tri-County Electric Cooperative, you became a member of an electric utility. While investor-owned utilities return a portion of any profits back to their shareholders, electric cooperatives operate on an at-cost basis. So instead of returning leftover funds, known as margins, to folks who might not live in the same region or even the same state as you do, Tri-County Electric Cooperative allocates and annually retires capital credits (also called patronage dividends, patronage refunds, patronage capital, or equity capital) based on how much electricity you purchased during a year.
This year, members received capital credits from years 1995-1996. That may seem like a long time ago. However, those funds helped us keep the lid on rates, reduced the amount of money we needed to borrow from outside lenders to build, maintain, and expand a reliable electric distribution system, and covered emergency expenses.
For more information on this part of the cooperative business, read the following Q & A:
Common Capital Credits Questions:
WHAT ARE CAPITAL CREDITS?
An electric cooperative operates on an at-cost basis by annually “allocating” to each member, based upon the member’s purchase of electricity, operating revenue remaining at the end of the year; later, as financial condition permits, these allocated amounts—capital credits—are retired. Capital credits represent the most significant source of equity for Tri-County Electric Cooperative. Since a cooperative’s members are also the people the cooperative serves, capital credits reflect each member’s ownership in, and contribution of capital to, 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 cooperatives 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 year, we subtract operating expenses from the operating revenue collected during the year. The balance is called an operating “margin.”
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.
DOES AMEREN OR LOCAL MUNICIPALITIES RETIRE CAPITAL CREDITS?
No. Within the electric industry, capital credits only exist at not-for-profit electric cooperatives owned by their members.
ARE CAPITAL CREDITS RETIRED EVERY YEAR?
Each year, the Tri-County Electric Cooperative Board of Directors makes a decision on whether to retire capital credits based on the financial health of the cooperative. During some years, the cooperative may experience high growth in the number of new accounts, or severe storms may result in the need to spend additional funds to repair lines. These and other events might increase costs and decrease member equity, causing the board not to retire capital credits. For this reason, Tri-County Electric's ability to retire capital credits reflects the cooperative’s strength and financial stability. The board alone decides whether to retire capital credits.
DO I LOSE MY CAPITAL CREDITS IN THE YEARS THE CO-OP DECIDES NOT TO MAKE RETIREMENTS?
No. All capital credits allocated for every year members have been served by Tri-County Electric Cooperative are maintained until such time as the board retires them. Prior to this year, Tri-County Electric Cooperative retired capital credits from all of 1995 and a portion of 1996.
I DID NOT GET ELECTRIC SERVICE FROM TRI-COUNTY ELECTRIC COOPERATIVE IN 1995 AND 1996. WILL I GET ANY RETIREMENT?
No. This year, capital credit retirements will only be made to members who purchased electricity from 1995 and 1996.
WHAT IF I HAVE MOVED?
If you move or no longer have electric service with Tri-County Electric Cooperative, it is important that you inform the cooperative of your current address, so those future retirements can be properly mailed to you. If you purchased electricity during the years being retired, then you are entitled to a capital credit retirement, even if you move out of the Tri-County Electric Cooperative service area. If we have your current address, then Tri-County Electric Cooperative will send your retirement check by mail.
If you have moved or no longer have electric service with Tri-County Electric Cooperative, please call the cooperative at 618-244-5151 to provide your current address.
WHAT HAPPENS TO THE CAPITAL CREDITS OF A MEMBER THAT PASSES AWAY?
The capital credits of a deceased member after 2014 may be paid at a discount without waiting for a general retirement. A deceased member's heir must request the credits by contacting the cooperative and providing the proper documentation required. If you are the heir of a deceased member who should be receiving capital credits, contact the Cooperative office at 618-244-5151 and speak with our Capital Credit Specialist, Hillary Keip.