Capital Credits:  One of the Benefits of Membership

CVEC operates under the cooperative business model, member-owned, not-for-profit, and governed by a board of directors elected by the members to represent our interests.  As such, distribution lines are constructed and maintained at actual costs.  Energy is purchased in bulk and delivered to members without a price markup that is typical of for profit utilities. At the end of the year, if there is money remaining after all of the bills are paid, each member is allocated a share of the remaining money based upon their energy usage.

The allocated share is known as a capital credit and these are reinvested in the physical plant for a period of time before being returned to the members.  The total amount of capital credits invested in the physical plant is comparable to the equity that many us have in our home.  CVEC’s equity level is about 28% of the total plant value with the remaining 72% having been paid with long term loans. On occasion, the Board of Directors will vote to return capital credits to CVEC members, both past and present.  CVEC has operated with razor thin margins, which have kept capital credits low and capital credits refunds infrequent.  CVEC has operated not unlike the individual who pays lower taxes throughout the year but does not get much of a refund come tax time.

The CVEC Board of Directors has decided that it would be prudent to increase the Cooperatives equity level, in large part to respond to changes in the wholesale energy level, where financial ratios can affect the terms of an energy contract.  This is important since energy is the largest single component of your energy dollar, typically 55-60%. While CVEC adjusted our rates slightly, beginning this month to increase our equity levels and other financial ratios, the byproduct of that adjustment is that each CVEC member should begin to look for a capital credit refund on annual basis if all goes well throughout the year and no extraordinary expenses are encountered.  Look on your electric bill for a line item credit if your refund is less than $50 and look for a check in them mail if your refund is larger.Service and energy delivered to you at cost and capital credits refunded to you the CVEC member-owner.