Returning money back to our members is an important cooperative value and we hope you agree that it’s also a nice benefit of being a member of JOEMC. The name “capital credits” may sound complex but it’s a simple concept. Capital credits are the annual margins—revenues minus expenses of the cooperative—which are allocated to each member based on their individual purchase and use of electricity. Until they’re returned to members, capital credits are funds used as operating capital to invest in power lines, substations, and other electric system assets that provide all of the JOEMC members with reliable electricity. After using the money for a period of years to finance investments in electric facilities, it is returned to our members.
To assure your return of capital credits and the fiscal health of your cooperative, your Board of Directors has approved and put into place an equity management plan. The plan uses an industry best standard that looks at the percent of member equity to total assets. It includes a schedule for the regular return of member equity in the form of capital credits. The equity plan also determines how much of the cooperative’s investment in electric system assets will be covered through member capital and how much will be covered by long-term debt. Our goal is to balance member capital (equity) and debt in order to give members the lowest possible rates.
The Board of Directors of the Cooperative has authorized retirement of all capital credits for 1996 and 40% of the capital credits for 2018. The projected aggregate amount of capital credits deemed available for retirement is $3,148,687.
Capital credits are monies that remain at the end of the year after operating costs are paid. Capital credits are assigned to each member based on the amount of the member’s electric bills for the year. For example if a member’s electric bills for the year of 2018 totaled $2,233.88 (this is considered the member’s patronage) their portion of the capital credits (also known as allocation) would be $112.28. This is calculated by multiplying the patronage of $2,233.88 times the 2018 allocation factor of 5.02617% to arrive at the current year’s allocation amount of $112.28. So to calculate how much credit you would receive since we are retiring 40% of the allocation for 2018 you would simply multiply the $112.28 times 40% to realize you should receive a $44.91 credit on your bill this year. If you had service with us in 1996, you would need to add any unpaid capital credits to this $44.91 for your total refund amount.