Capital Credits

The Cooperative Business Model

In business, the phrase “bottom line” usually refers to the profits. It comes from the concept of a financial report known as the income statement or the statement of revenues and expenses.

In the income statement, revenues for a given time period are summarized and then expenses for the same period are listed. When expenses are subtracted from revenues, the money that remains represents net profit and is shown as the last line of the statement. However, with a cooperative, it does not work that way.

Our income statement has a bottom line, but it isn’t called profit. It is called the margin. Why? Because cooperatives don’t exist to make a profit.

The money that is left over when expenses are subtracted from revenues does not belong to the cooperative. It belongs to the members of the cooperative. It’s their money, and they are going to get it back.

That’s right, cooperative members get their share of this profit allocated back to them as capital credits. The co-op may keep it for a period, to use it temporarily as working capital, but eventually, those margins are returned to members, either through lower electric bills or as a check written directly to the member. The concept is an essential element of the cooperative business model: Margins belong to the members.

You won’t ever see an Investor Owned Utility returning profits to customers. They exist to benefit their owners, the shareholders. And you won’t see municipal utilities returning profits either. They keep the money to use for other community services.

Each year the decision to pay capital credits is decided by the Board of Directors based on the financial health of the Cooperative. During some years, a Cooperative may experience high growth in the number of new accounts added or severe storms may result in the need to spend additional funds to repair lines. Both events may affect the funds needed to maintain and operate the Cooperative in which event the Board may defer any refunds of capital credits in that year. However, members do not lose capital credits, they are simply deferred until such time as the Board determines that it is proper to pay them for a particular year.

Craighead Electric Pays Capital Credits for the year 2000

The Craighead Electric Cooperative Corporation Board of Directors has authorized the return of $1,164,011 in capital credits for the year 2000. If you received electric service in your name in 2000, you are entitled to receive a monetary credit based on how much you paid the Coop for electric service during that year.

The best way to ensure that you receive any money due to you is to keep your mailing address current. To check or update your mailing address with Craighead Electric, please call us toll-free at 1-800-794-5012. Even if you are no longer a member, you will still receive your proportionate share of the capital credits if your mailing address remains current.

Members who received electric service in 2000 will receive a check in the mail by the end of November. Due to the expense of processing and mailing checks, if the refund amount is less than $20.00 it will instead be credited to the member’s December 2018 electric bill.

Prior to this year, the Coop refunded all capital credits from its founding in 1937 through 1999. By paying these capital credits from 2000, Craighead Electric Cooperative will have returned $20,306,501 to current and former members in capital credit payments.