Capital Credits
| Capital Credits | |
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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 as capital credits, to the members in proportion to their usage during each year. Capital credits represent each member's share of Okanoga County Electric Co-op, Inc margins. |
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What do cooperatives do with capital credits? Every business needs to maintain a suitable balance debt to equity to ensure its financial health and stability. Capital credits are the most significant source of equity for most electric cooperatives. Equity is used to help meet the expenses of the co-op, such as paying for 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. |
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| How does the cooperative determine who receives capital credits? Capital credits are allocated to each member of the cooperative every year based on patronage in the cooperative. The board of directors determines the basis for the allocation. | |
| How much does OCEC pay in capital credits? 2011's capital credit payout will be approximately $66,000. This is a decrease of $100,000 from 2010. Before 2011, OCEC was ranked 2nd highest in Washington State for capital credit payouts. | |
| Why is OCEC paying out less for capital credits in 2011? The net effect is that we need to borrow less money and this will reduce interest costs in the future. | |
| Who receives capital credit checks in 2011? If you were a member of OCEC in 1992 with patronage, you will receive capital credits. |
