Capital Credits-also known as patronage capital or owner’s equity-are margins (money left over after expenses are paid) credited to members of cooperatives like West Central Electric.
Cooperative Invests Margins back into the Company
Instead of just sending each owner their share of the annual margin, the cooperative uses all of it to help pay for maintenance and the continuing construction of power lines to new customers. By doing this the cooperative invests the margins earned by each owner back into the system to help build owners’ equity and reduce the amount of money the cooperative has to borrow. Your capital credits, or owners’ equity, supplies about 30 percent of the funds needed to build and maintain such things as electric lines, transformers, poles and substations. By using these "internally generated" funds and investing in the distribution system, the owners save money. The owners own more of the electric system and the lender owns less. This, also, allows us to maintain system quality at its highest level.
Each year, active members will receive a capital credit statement showing the amount of your contribution to the capital account for the calendar year. This is not a check and cannot be cashed, or credited, toward your bill. It is simply a statement of the status of your capital credit account.
Capital credit checks are disbursed to members after a capital credit retirement is approved by the Board of Directors. Payments are based on how much electricity was purchased. In December of 2013, West Central Electric returned $200,000 in capital credits to the membership.
Leaving the Coop?
If you leave our system, the amount of capital credits that have been allocated to you will remain in your name. When we retire the capital credits for the year, or years, you were on our service yours will be refunded also. For this reason, we advise our members who leave our system to keep us updated on your current address at least every five years.