Socorro Electric Cooperative has announced it will be retiring $366,787 in capital credits to customers who were members of the co-op in 1994-1995. Capital credits represent a member’s share of the cooperative’s margins during the time they have a membership. Capital credits are earned by every member based on the amount of electricity they use.
At the end of the fiscal year, any funds (margins) remaining after expenses have been paid are allocated to the member’s account.
SEC retains these allocated margins for a period of time, like an interest-free loan, which in turn reduces the amount of borrowing SEC must get from external sources. This helps to keep SEC’s operations moving along at a reduced cost.
Capital credits are not cash in the bank. There is no bank account holding ‘capital credits.’ They are bookkeeping entries to reflect the patronage capital contributions to the system. Capital credits are what members have invested in the operation of the cooperative.
Each year, the Board of Trustees determines if the retirement, or refund, of capital credits back to the members, is in order. Board members consider the overall financial condition of SEC when deciding if, when, and how many capital credits can be returned to the members. Capital credits are returned on a “first-in, first-out” basis and this year the board has decided to return capital credits for 1994-95.
If you were a member of SEC in those years you should receive a check during the first week of December for your share of the capital credits allocated for that year.
If your share for this retirement is less than $5, you will not receive a check, but instead, the amount will be rolled forward until the check amount is at least $5 and will be paid in future retirements.
The current cycle for retirement is 25 years.
Socorro Electric Cooperative is a non-profit cooperative whose members share in the ownership, construction, maintenance and prosperity of the cooperative. This reflects one of the 7 Cooperative Principles that SEC operates by Member Economic Participation. This participation by the members is unique to electric cooperatives because investor-owned and municipal electric companies do not pay “dividends” back to their customers.