Understanding Capital Credits
One of the advantages of being a member-owner of an electric cooperative is sharing in its success. Northern Plains Electric Cooperative is proud to provide its member-owners with affordable electric rates to power their homes and businesses. Certainly, this is a measure of success. Your cooperative is equally proud to have returned $11.9 million in capital credits over the years—another measure of success.
However, the capital credit concept is often misunderstood. The following information is offered to help clarify this concept.
What are capital credits?
Capital Credits are an allocation of funds that represents your share of the ownership in the cooperative. Capital credits can also be called member equity. Although accountants often cringe at the analogy, the distribution of capital credits is often compared to dividends in a not-for-profit company.
Northern Plains is a member-owned, not-for-profit organization. At the end of each year and after all operating expenses have been paid, the remaining margins are allocated to each member based on the amount of energy purchased. The amount refunded from your accumulated total is determined by Northern Plains Electric's board of directors and legal requirements.
Will Northern Plains refund all these capital credits?
Yes, as a not-for-profit organization, 100% of the margins must be returned to member-owners. So, why didn't I get 100% of my accrued capital credits? There are two reasons why Northern Plains doesn't refund all of these credits each year:
- It would be necessary to raise rates beyond affordable limits to generate enough capital to refund all accrued credits.
- Lenders require your cooperative to maintain certain levels of capital as a reserve.
If a member-owner moves away, how will they get their capital credits?
It is important to notify your cooperative of your forwarding address so we can send future refunds to you. It is also recommended that you keep capital credit information with your important papers, so your family members will know of future refunds.
Help us find past members with unclaimed capital credits! Click here to review a list of members who have moved off our system without claiming their capital credits. We’d like to reward them with a check—and you can help by notifying us of their whereabouts!
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