Capital Credits - The Cooperative Difference
One of the special things about cooperatives is that the co-op is actually owned by its members and each member has an ownership stake in the business in the form of Capital Credits. BEMC is a not-for-profit corporation, but we must maintain a small margin of revenue above costs.
The most significant source of equity for co-ops is the retention of margins from the sale of electricity. After expenses for furnishing your electricity are satisfied, the money left over (the margin) is set aside for you in the form of Capital Credits. These Credits are allocated to members based on their purchases from the co-op.
The equity from Capital Credits make it possible for BEMC to secure loans, maintain facilities and services and expand our system to meet the demands of a steadily growing membership. Capital Credits are governed by federal and state laws and regulations, our articles of incorporation and bylaws, mortgage covenants, and policies of our Board of Directors. Other factors that come into play are the need to balance debt and equity to maintain creditworthiness, rate competitiveness and accounting practices.
Capital Credits are returned to BEMC members on a 25-year cycle. In recent years we have been able to accelerate that cycle, as shown in this table covering the past ten years. When a return of Capital Credits is authorized by the Board of Directors, members eligible for a capital credit return will receive a letter by mail. That's a good reason to be sure we always have your correct mailing address!
The bottom line is that all co-op members eventually receive a payback for their years of investment in their co-op. That’s the cooperative difference.