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Capital Credits

Cooperatives are different, because unlike for-profit and municipal utilities, cooperatives are owned by their members. Anyone who gets electricity from Pella Cooperative Electric Association (PCEA) is a member.

The goal of most utilities is to provide a good return on stockholders' money. But not electric cooperatives - we are not-for-profit organizations that work to provide service at cost. When the books are closed each year, margins (a.k.a. profits) are allocated back to the members based on the amount of electricity they used that  year. 

The allocation is called a "capital credit." 

Capital credits are held for a time to cover operating expenses, which helps to keep rates stable. Capital credits are then retired, and the money is returned to members usually in the form of a check or a credit on the bill. Historically, Pella Cooperative Electric has retired all capital credits within 20 years or less of the original allocation.

Members leaving the cooperative can also enjoy the benefits of capital credits by requesting early retirement when they leave the system. The cooperative also does early retirements for estates. All early retirements are calculated on a discounted net present value. 

Infographic of how capital credits are returned to membership

Click image to view larger chart.

 

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