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Capital credits are just one of the many reasons it is great to be a member of an electric co-op. This month, Victory Electric is retiring capital credits and returning more than $1 million to members. Since 2019 we have retired $5.5 million in capital credits back to our members.

So, what is a capital credits retirement? Electric cooperatives are not like other utilities. We operate on a not-for-profit basis, which means we operate as close to cost as possible. But even not-for-profit businesses can have money left over after all expenses are paid in a given year. The difference is, at the end of the year, we allocate that money (but not immediately retire) to our members’ accounts. We collect only enough revenue to run and expand business without the need to generate profits for distant shareholders. Victory Electric works hard every day to keep rates as low as possible. But it’s sure nice to know when there are extra margins at the end of the year, they go back to members and members receive cash back over time.

As a not-for-profit utility, Victory Electric is limited to two options for raising capital: borrowing or raising capital from its members. By combining capital credits funding obtained from members with borrowed money on which Victory Electric must pay interest, the cooperative is able to lower its cost of capital. Therefore, capital credits help Victory Electric remain in good financial standing and keep rates as low as possible for our members. The capital is used for improvements, such as substations, power lines and other electrical system facilities that serve our members. It also helps to build and sustain the cooperative in an industry experiencing massive changes and even more technological advances.

After each fiscal year, and once the determination has been made that the financial condition of the cooperative is stable and adequate to meet operating costs and debt covenants, the board of trustees may elect to return excess capital by retiring capital credits to Victory Electric members. After evaluating the health of the cooperative in 2022, Victory Electric’s board of trustees voted to retire $1 million. The capital credits will be applied as a bill credit on members December electric bill. Checks are expected to be mailed to inactive members in early to mid-December. Victory Electric members who may be leaving or have already left the cooperative service area are encouraged to provide Victory Electric with a current mailing address so that capital credits can be returned as they are retired. If you think you may be an inactive member without a current address on file, please contact our office to arrange for your capital credit payment to be issued.

Only your local electric cooperative makes every customer an owner of the business. It is just another way we are looking out for our members.

Thanks, Shane