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
How do capital credits work? graphic

 

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 bill showing capital credits
 
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 about $900,000 to current members on their May statements and $200,000 to past members. Since it was founded 82 years ago, about $17 million have been paid back to past and current members.
 
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!