Your electric cooperative belongs to you and the other members who receive electric service from RECC. Your membership interest is based on member equity investments known as capital credits.
Every month you pay your bill for electric service, and the co-op pays the expenses of providing that service. Any funds left over at the end of the year, called margins, provide equity for the cooperative and you. The margins are allocated to the members in proportion to their purchases during the year. Your share of the margin is your capital credits.
As capital credits accumulate the co-op retains an amount needed for satisfy its lenders, and when the financial condition is strong the Board of Directors may elect to distribute a portion back to the members. RECC holds the capital credits for a period of years before repaying them, for two purposes:
- As working capital to keep the cooperative financially sound and to allow for emergencies, such as a large storm which requires replacement of many poles and power lines.
- To reduce debt requirements for investment made in our electric distribution system. This builds member equity in the cooperative.
Even if members move off the RECC electric system, they retain their capital credit allocation. They may continue to receive any annual payments made, as long as they keep the cooperative informed of their current address.
If a member dies, the capital credits can continue to be paid to spouse under a joint membership, or to an estate. Or, the executor of the estate may choose to have any outstanding capital credits paid, at a discounted rate.
Capital credits are a basic difference between co-ops and for-profit corporations. The total capital credit retirements made to RECC members since 1978 is over $4 million.