At the end of each year, Southern Indiana Power calculates our operating margin, which is the amount our income exceeded our expenses during the year.

We then allocate the operating margin as capital credits to each member based on the amount of electricity purchased throughout the year. When our board of directors determines its financially feasible and prudent, and when we meet the financial requirements stated in our loan documents, we retire the capital credits by sending a check to the members who had electric service with the co-op during the years that are up for retirement.

In the interim, we use the allocated but unretired capital credits to improve and expand our electric system and to meet our other capital needs. This reduces our need to borrow money and helps us provide reliable electric service.

You might wonder why we do this. As an electric cooperative, we are here to provide at-cost electric service. We arent here to make a profit and dont have shareholders. As a member of an electric cooperative, you invest in the efficient operation of your co-op.

Unlike an investor-owned utility, we dont pay dividends or other amounts to our shareholders who dont purchase electricity.

Every year, the Southern Indiana Power Board of Directors evaluates the cooperatives financial position and capital needs and approves a capital credit retirement plan.

This year, Southern Indiana Power retired over $549,000 allocated capital credits from 2000. Members will receive their capital credit checks this month.

Capital credits benefit all co-op members by keeping costs and electric rates as low as possible. Capital credit allocations help qualify Southern Indiana Power for cooperative status under federal income tax law. Capital credits also help reduce the debt the co-op has to borrow, which keeps electric rates as low as possible. The bottom line: Capital credits are just one of the many benefits of being a member of Southern Indiana Power.

If you leave the cooperative, please provide us with your forwarding address to help ensure you receive your capital credits when they are retired.