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Capital Credits

Capital Credits

It is the purpose of a cooperative to provide a needed service at cost. In order to be financially stable, a cooperative must show a margin between what it costs to operate the business and what it takes in as income. If a cooperative cannot show a positive margin, it cannot obtain adequate financing for future expansion.

The accumulation of margins is how the cooperative builds equity. The cooperative agrees to use this equity to help finance new construction and improvements to the system, and at some future date, the cooperative will return the equity back to the member.

 

What are capital credits?

Patronage Capital (also known as capital credits) are the margins (profits) that the cooperative realizes each year. Your cooperative’s margin is any money left after all operating expenses have been paid. Since members are owners of the cooperative, all of that money will be allocated to the member-owner’s accounts based on energy used by the member.

 

What is the capital credit allocation process?

At the end of each operational year, capital credits are allocated based on the margins (revenues minus expenses) achieved in a given year and then pro-rated among the members based on the amount of energy each member contributed in purchasing electric service. The allocation of capital credits is merely a notification to a cooperative member that the cooperative realized a margin (profit) for the fiscal year and, in accordance with its bylaws, is allocating a pro rata share of the margin to the member, based on the member’s kWh usage.

 

When are capital credits paid?

The retirement (disbursement) of capital credits is determined each year by the Board of Trustees elected by the membership. The retirement is based on the equity necessary to maintain the financial soundness of the Cooperative.

Historically, margins have been returned at the end of the year. This allows the Cooperative to use the margins throughout the year to improve the quality of service and to increase the system’s capacity to deliver electricity. This permits Berkeley Electric Cooperative to borrow less money to continually upgrade your electrical system.

If you no longer have service with Berkeley Electric Cooperative and change your address, please notify the Cooperative with the new information since you will receive future correspondence concerning your capital credits account.

 

Unclaimed Capital Credits

The Cooperative is required to maintain a list of unclaimed or abandoned capital credits. To determine if any of these credits belong to you please check the following database or contact your local district office.

 

What happens in the case of a deceased member?

Berkeley Electric Cooperative bylaws provide for an early retirement of the capital credits of a deceased member to his or her estate. Representatives of a deceased member's estate must contact the cooperative and supply the necessary legal documents before a refund can be made. No early retirement of capital credits is allowed in the case of dissolution of a corporation or partnership. Under these circumstances, an assignment of the capital credits to another Berkeley Electric Coop member would be allowed with the proper documentation.

 

How does a member know the amount of his or her capital credits?

Each member has a separate capital credit account which represents the member's ownership in the cooperative. When capital credits are allocated at the end of a year, all members who received electric service during that year will receive an allocation notice showing their current year's allocation and the outstanding balance of all year's service.

 

What should a member do if he or she moves from our service area?

The member should inform our office of any changes in his or her mailing address. it is a member's responsibility to make sure the cooperative has up-to-date address information at all times. Each year, hundreds of refund checks are returned to the cooperative with invalid addresses.

 

What if a member of a joint membership is deceased?

Upon the death of either spouse in a joint membership, the name of the deceased person is removed from the membership and the membership is then held solely by the surviving spouse. A joint membership is not eligible for an early retirement upon the death of one of its members.

 

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