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What are capital credits?
Each member of our Co-op is a part-owner and is entitled to share in the financial returns of the organization. Investor-owned utilities return a portion of any profits back to their shareholders. Electric co-ops operate on an at-cost basis. This means that McLeod Co-op Power allocates 100 percent of its margins (revenue less expenses) to its members who purchased electricity during the year, and retires (or pays back) those margins at a future date to those very members. We call those capital credit allocations. Between the years those margins are allocated and retired, the Co-op uses those funds as operating capital to help the Co-op pay debt and maintain the appropriate equity-to-assets balance.
Most years the Co-op is able to retire capital credits from previous years.
The Board of Directors determines, based on the Co-op’s financial position, the amount of capital credits that will be paid out. Current members receive a credit on the bill they are sent in December. Those who are no longer members will receive a check in the mail.
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