Capital credits: One thing that makes us different

George Carter

This issue, you’ll notice several pages of names of members and former members who have an outstanding capital credits check on file with the cooperative. This means we’ve mailed a check, but it was never cashed. It may have been lost or returned because the person moved and we no longer have a valid address. Seeing this list reminds me that capital credits make us very different from other utilities — after all, it is our members’ share of ownership in the cooperative. However, capital credits may also be the most confusing part of co-op ownership.

Capital credits are allocated to members at the end of the year after expenses are paid. As with any business, capital is needed to continue the business year after year. We as a not-for-profit utility are no different. Each year, millions of dollars are invested in substations, poles, wires, transformers, and equipment to keep your lights on. The money needed for this investment is called capital. Since we are a not-for-profit utility, we don’t have stockholders and can’t raise capital in the traditional ways a for-profit stock company does. The capital, or money needed to invest in reliability, must come from each of us members.

This form of capital contribution is one of the seven cooperative principles: members’ economic participation. Members contribute equity into the cooperative through their monthly billings. The PPEC board of trustees carefully monitors the cooperative’s equity to ensure fairness over time. Since utility equipment lasts many years, equity must be looked at with a long-term perspective.

As capital is collected and reinvested in the utility, each member’s equity grows. This is called capital credits. Each member receives a share based on his or her actual energy use each year. Each member and former member has a capital credits account where the equity of the co-op is maintained. This ensures our long-term financial stability.

Each year, the board determines if we are financially strong enough to return a portion of capital credits to the membership. Our co-op has a long history of returning capital to our members each year. Most active members receive a bill credit on their December bills. Former members receive a check mailed to them in December.

This brings us back to the list of uncashed checks starting on page 18A. We have a long history of returning capital to members annually.

Capital credits are a vital part of the financial strength of your cooperative and represent your true ownership in PPEC. Thank you for your membership and for your economic participation.

President and CEO