Sharing in your co-op’s success

Capital credits a benefit of co-op membership

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Posted on Jun 07 2020 in Southeastern Indiana REMC

One tangible benefit of being an REMC customer — that literally puts money back in your pocket — is your access to what are called “capital credits.”

Capital credits are simply your share of your electric cooperative ownership. This concept of returning your financial investment in your electric utility back to you is something you may not be used to. But your REMC is a not-for-profit organization. It operates at cost, not to grow profits.

Each REMC customer’s investment in the REMC is used for substations, poles, wire, transformers and equipment to keep the lights on. This investment is part of your monthly electric bill.  

Having customers actually invest in their electric company’s electric system is different than what investor-owned utilities (like Duke) do. At investor-owned utilities, stockholders pay the necessary costs to keep the utility running. But as an REMC customer, you are, in fact, an owner of your electric utility and as an owner you’re responsible for making sure your utility has what it needs to operate.

As an owner, you also enjoy tangible benefits. For instance, you have a voice in how your REMC is run. Each year you can vote for your co-op’s board of directors, or you can even run for a seat on the board. And, just as stockholders receive dividends from investor-owned utilities, REMC customers are entitled to allocations from their cooperative.

The amount of those allocations is based on each customer’s energy use. Customers and former customers have capital credits accounts where the equity of the co-op is maintained.

At the end of each year,  your REMC board calculates the co-op’s operating margin — the amount that income exceeds expenses. This margin may be used to improve or expand the co-op’s electric system or to meet other capital needs. Using the margin to pay for these necessary expenses means the REMC doesn’t need to borrow money to ensure that it can continue to provide safe, reliable and affordable service.

If there is excess revenue after these necessary expenses are accounted for, it is allocated back to you as capital credits. When the co-op’s financial strength permits, the board issues those credits back to the REMC customers.

Checks are mailed to customers and former customers that the REMC has addresses for. (That’s why it’s important to make sure your REMC has your correct address.) If capital credit checks are returned to the co-op because they were sent to the wrong addresses, the REMC will typically publish the names of those whose checks are unclaimed in Indiana Connection with the hope that those customers and former customers or their heirs will contact the REMC and claim their capital credits.

Amounts of those checks may range from a few dollars to several hundred dollars depending on the amount of electricity each account holder used.

You may wonder why your REMC is sending you money back in the first place. It all boils down to the fact that unlike investor-owned electric companies, the REMC provides at-cost electric service. It’s not in business to make a profit. Since you’re a part owner of your REMC, you share in its success.

To find out if your name is on the list of members to whom we owe capital credit dollars, visit www.seiremc.com.