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 each year is 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?
Fayette Electric Cooperative, Inc. operates on a non-profit basis for the mutual benefit of its member-owners. Through non-profit operation, FEC is able to furnish dependable electric service at the lowest possible cost.
The retirement (disbursement) of capital credits is determined each year by the Board of Directors elected by the membership. The retirement is based on the equity necessary to maintain the financial soundness of the Cooperative.
Historically, margins have been invested in the electric system to improve the quality of service and to increase the system’s capacity to deliver electricity. This permits FEC to borrow less money to continually upgrade your electrical system.
If you no longer have service with FEC and change your address, please notify the Cooperative with the new information since you will receive future correspondence concerning your capital credits account.
Do you have unclaimed capital credits?
If you are listed, are an heir of a member listed, or can provide an address for a member on the link at the top right, please contact TC Muniz at 979-968-4209 or Linda Gaddes at 979-968-4215.