What Are Capital Credits?
A cooperative does not earn profits in the sense that other businesses do. Instead, any margins, or revenues remaining after all expenses have been paid, are returned as Capital Credits, to the members in proportion to their patronage during each year.
Capital Credits represent each member’s share of Okanogan County Electric Cooperative’s (OCEC) equity.
What Do Cooperatives Do With Capital Credits?
Every business needs to maintain a suitable balance debt to equity to ensure its financial health and stability. Capital Credits are the most significant source of equity for most electric cooperatives.
Equity is used to help meet the expenses of the co-op, such as paying for new equipment to serve members and repaying debt. Capital Credits help keep rates at a competitive level by reducing the amount of funds that must be borrowed.
How Does the Cooperative Determine Who Receives Capital Credits?
Capital Credits are allocated to each member of the cooperative every year based on patronage in the cooperative.