It Pays to be a Co-op Member!

It Pays to be a Co-op Member!

More Power to You

Co-op Members Benefit By Getting Their Piece of the Pie

Shane L. Larson
Shane L. Larson,
Chief Executive Officer

 

Capital credits. Margins. Allocation. Retirement. These concepts are unique to cooperatives, a business model that many people simply don’t understand.
 
Before your eyes start to glaze over, I’ll try to explain the process with an analogy that’s familiar to everyone. Let’s say that capital credits are like a huge pie—apple, pumpkin, banana cream, or lemon meringue—pick your favorite.
 
Each eligible co-op member gets a slice of pie based on how much energy they used during the previous year and how much they paid for it. A residential member whose monthly bill is relatively modest will get a small slice of the pie. But larger industrial members who pay thousands of dollars each month will receive a much bigger piece.
 
Obviously, that’s an oversimplification. I encourage you to read these Frequently Asked Questions to get a more thorough understanding of capital credits and how they are distributed.
 
Members’ economic participation is one of the seven co-op principles and distinguishes energy cooperatives from investor-owned and municipal utilities.
 
Sample capital credits statement
As a co-op member, you have equity in Rock Energy. The amount of your equity is shown on your statement each May. (See sample bill.) That money is used as working capital to operate, maintain, and upgrade the cooperative’s energy distribution system.
 
As a cooperative, we don’t talk about profits because we’re a not-for-profit business. By definition, a cooperative is “an enterprise that is collectively owned and operated for the mutual benefit of all members.” These benefits include the generation, accumulation, and return of capital.
 
This year Rock Energy is distributing more than $800,000 to current members on their May statements and over $200,000 to past members. Since it was founded 81 years ago, more than $16 million has been paid back to past and current members.

Here are some interesting facts and figures about this year’s capital credits:

How to capital credits work? sample statement
  • The average allocation of 2016 margins was $132.
  • The average amount retired and applied to a member’s statement was $49.
Many longtime members are quite familiar with the concept of getting money back from the co-op. In fact, until eight years ago members would receive their capital credits checks at our Member Appreciation Day in the fall. The checks were a visible reminder of the cooperative difference. Now, we return capital credits to members on their May statements to avoid the cost of issuing checks.
 
Donald Russell, a co-op member since 1959, didn’t have to pay his Rock Energy bill in May because his $67 credit covered the cost of electricity he used. There’s even some left that will be applied to next month’s bill. Russell said he likes the idea of getting a free month of electricity. Who wouldn’t? Through the years he also has built up more than $2,000 in equity, just by using energy.
 
Helen Carroll, whose family has been a co-op member almost from the beginning, said capital credits play a big role in what it means to be part of the cooperative. The credit on her statement amounted to $108, and she has about $3,500 in equity.
 
Both Russell and Carroll pointed out that the benefit of co-op membership goes beyond capital credits. Russell said he is very satisfied with the quick response time to outages and the co-op’s friendly staff. Carroll said she appreciates that the co-op sponsors youth programs, which are fun, educational, and might even encourage young people to become involved in the future.
 
After reading this column, I hope you have a better understanding of co-op finances and capital credits. If you have any questions, please give us a call. As always, I want to thank you for allowing us to be your energy provider. If we can do anything to improve our service, please let us know.
 
Enjoy your piece of the pie!