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co-op values


You Get The Credit Operation at cost is part of the co-op difference


One benefit of membership involves the allocation of excess revenue, called margins, in the form of capital credits.


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Electric co-ops operate at cost— collecting enough revenue to run and expand the business but with no need to generate profits for distant shareholders. When Kiamichi Electric Cooperative (KEC)has money left over, it’s allocated back to you and other members as capital credits. When the co-op’s financial position permits, the co-op retires, or pays, the capital credits to members in cash or as a bill credit.


KEC has retired $7.2 million in capital credits to members since 1969. This year, the co-op board of trustees approved a retirement of $765,000 to members


lectric cooperatives aren’t like other utilities—you, as a member, own a portion of the business.


who purchased electricity from the co-op in 1990 and a portion of 1991.


Since 1988, co-ops nationwide have retired $9.5 billion to current and former members, based on data from the federal Rural Utilities Service and the National Rural Utilities Cooperative Finance Corporation (CFC), the premier private market lender to electric cooperatives.


The retirement of capital credits—so-called because members provide capital to the cooperative for it to operate and expand— depends on the co-op’s financial status. Kiamichi Electric holds onto allocated capital credits to cover emergencies such as major ice storms and other unexpected events, and to grow its electric system. This action decreases the need to borrow money from lending institutions. After a number of years, if financial conditions permit,


How Do Capital Credits Work?


Because electric co-ops operate at cost, any excess revenues, called margins, are returned to members in the form of capital credits.


Your co-op notifies you of how and


when you’ll


receive your capital credits retirements.


4 5


Your co-op tracks how much electricity you buy and how much money you pay for it throughout the year.


Electric co-ops have retired


$9.5 billion


When the co-op’s financial condition permits, your board of directors/trustees


decides to retire, or pay, the capital credits.


Source: National Rural Utilities Cooperative Finance Corporation


to members since 1988.


3 4 | july-august 2013 | Light Post 1


At the end of the year, your co-op completes


financial matters and determines whether there is excess revenues, called margins.


Your co-op allocates the margins to members as capital credits based upon their use of electricity during the year.


2 Did You Know?


Electric cooperatives have retired $9.5 billion to members since 1988—$626 million in 2010 alone. Because electric co-ops operate at cost, any excess revenues, called margins, are allocated and retired to members in the form of capital credits.


$626 million in 2010


$9.5 billion since 1988


Source: National Rural Utilities Cooperative Finance Corporation


the co-op board of trustees may decide to retire a set amount of capital credits.


Co-op members are allocated capital credits based on the amount of electricity they consumed during a year. The more electricity a member uses, the more capital that member is putting into the co-op, and the greater their credit will be.


“Margins earned from electric revenues are the only real source of equity for not- for-profit electric cooperatives,” explained Rich Larochelle, CFC senior vice president, corporate relations. “Strong and consistent equity levels are key to financial strength. It's essential for a co-op to maintain the right balance between retiring capital credits to members and retaining sufficient equity on its balance sheet.”


If you are a KEC member who purchased electricty from the co-op in 1990 or a portion of 1991, your capital credit retirement will appear as a credit on your October electric bill. Former members will receive a check in the mail.


If you have questions regarding capital credits, please call your electric cooperative at 800-888-2731.


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