Capital Credit Allocation Letters Mailed
Members who received electric power from Prince George Electric Cooperative in fiscal year 2014 were recently notified of their portion of Capital Credits allocated to their unretired Capital Credit account.
What are Capital Credits?
Capital credits are a benefit of cooperative membership and represent each member’s ownership of the cooperative. Capital credits are the margins credited (or allocated) to the members of the cooperative based on their purchases from the cooperative the previous year. No stock has to be purchased to get a return on the money you have paid into the cooperative.
These margins are used by the cooperative as capital (money) to operate the business for a period of time.
You may also see capital credits referred to as “patronage capital” or “equity capital”.
What is the difference between an allocation and a retirement?
Capital credit allocations are pooled together and used as operating capital so that we can serve our members with reliable power. These funds pay for expensive power reliability improvements and maintenance such as replacing power lines and building substations. Your allocation amount is sent to you each year by letter.
If we refunded the total amount of allocations, we would have to borrow that amount of money in order to continue operating. Having operating capital helps the cooperative minimize the amount of high-interest money it must borrow, which in turn helps lower member’s costs by stabilizing rates.
A retirement is the amount you receive back as a capital credit refund. It is a percentage of your total capital credits balance. The percentage is decided upon annually, based on the board of directors discretion. A “retirement” may not be made every year.