Capital Credits Q&A

Capital Credits, another example of the cooperative difference

Since 1975, Piedmont Electric has returned more than $22.5 million in capital credits to members. As a not-for-profit electric cooperative, it is our commitment to return any excess revenue to our members. Those who are eligible for this credit will receive a check or a credit on their bill in December.

Capital Credits Q&A

What are capital credits?

A cooperative does not earn profits in the sense that other businesses do. Instead, any margins, or revenues remaining after all expenses have been paid, are returned to the members in proportion to their usage of the co-op’s services through capital credit allocations and retirements. Capital credits represent each member’s share of the cooperative’s margins and ownership of the co-op.

What do cooperatives do with capital credits?

Before being returned to members, capital credits are used to help pay the expenses of the co-op, such as new equipment to serve members and repaying debt. Capital credits help keep rates at a competitive level by reducing the amount of funds that must be borrowed.

What do I have to do to start accumulating capital credits?

Capital credits are returned to everyone who purchased electricity during a year in which the utility collected more than it spent. Your membership with Piedmont Electric activates your capital credit account.

How are capital credits calculated?

The amount of capital credits you earn in a given year is based upon the amount of revenue you contribute to the cooperative through payment of your monthly bills.

How are capital credits disbursed?

Each year the board of directors determines whether the co-op’s financial position permits the return, or retirement, of capital credits and, if so, what amount of capital credits will be retired.

Will I receive a capital credit check every year?

Not necessarily. The board of directors must authorize a retirement before you receive a check. When considering a retirement, the board analyzes the financial health of the cooperative.

What happens to a member’s capital credits if the member moves away from the system?

A member who terminates service no longer receives additional capital credit allocations. The balance in the member’s capital credit account is maintained until it is retired in full.

It is the former member’s responsibility to notify the co-op of any changes in address so the member can be located when it is time for the co-op to retire capital credits.

 

 

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