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What are capital credits?

What are capital credits?

One of the great benefits of being a member of Anza Electric Cooperative is that each year, you're assigned a share of any net margins. This is called capital credits and your share is based on on the amount of energy you purchased.

Rural electric cooperatives such as Anza Electric Cooperative Inc. (AEC) are different from investor-owned utilities (IOUs), whose primary objective is to make a profit. A rural electric cooperative is a not-for-profit business that exists solely to provide its members with electricity.

Nonprofit electric cooperatives such as AEC deliver energy to their members at the cost of service. IOUs typically distribute their profits to investors across the nation or even the world—not necessarily to those they serve.

Capital credits come from the margins that the cooperative has left after paying all of its expenses in a given year.

The amount assigned in your name depends on your energy purchases. To calculate this, we divide your annual energy purchase by the Cooperative's operating income for the year. The more electricity you buy, the more capital credits you earn.

Almost every year since 1989 the AEC board of directors has approved the retirement of capital credits. The decision to retire Capital Credits each year is made by the Board of Directors. The retirement amount varies and is based on the amount necessary to maintain financial soundness of the cooperative.

Since 1989, AEC has returned over $10 million to its members.  

This year, AEC once again returned $500,000 to its present and former members for capital credits earned through 2014. This retirement (payment) represented any remaining balance from 1996 and a percentage of capital credits earned from 1997 through 2014.

As a way to reduce our exposure to potential fraud and to reduce processing costs, fewer checks were issued again this year. Instead, bill credits were issued for our active members and were reflected on the September 2016 bills. Former members who no longer have service received checks if their check amount was greater than $25.00

If you move or no longer have service, be sure AEC has your current mailing address in order to send you capital credits in the future.

 

 

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