Capital Credits in the member’s account belong to the heirs. In order to assist the member’s heirs in closing the member’s account, BCREMC offers a special Capital Credit retirement of the outstanding balance of the deceased member’s Capital Credit account, paid in full. However, we will need an address to send out the future Hoosier Energy checks.
A member who terminates service no longer receives additional Capital Credit allocations. The balance in the member’s Capital Credit account is maintained until it is retired in full. It is the former member’s responsibility to notify the co-op of any changes in address, so that they can be located when it is time for BCREMC to retire Capital Credits allocated to their former membership account.
Each year the Board of Directors determines whether the co-op’s financial position permits the return, or retirement, of Capital Credits and, if so, what amount of Capital Credits will be retired.
The Board also decides the method for determining which Capital Credits are returned. At this time, BCREMC retires Capital Credits using the First-in, First-out, or FIFO, method. That means that the Capital Credits that have been invested in the Cooperative for the longest period of time are returned to members first. We are generally on a 25 year cycle – for example, Capital Credits allocated in 1994 are returned to members in 2019.
Capital Credits are allocated to each member of BCREMC every year based on their economic participation with the Cooperative – how much they paid into the Cooperative for electric service. The Board of Directors determines the basis for the allocation.
Every business needs to maintain a suitable balance between debt and equity to ensure financial health and stability. Capital Credits are the most significant source of equity for most electric cooperatives. Equity is used to help meet the expenses of the co-op, such as paying for new equipment to serve members and repaying debt. Capital Credits help keep rates at a competitive level by reducing the amount of funds that must be borrowed.
A cooperative does not earn profits in the sense that other businesses do. Instead, any margins (revenue remaining after all expenses have been paid) are returned to the members in proportion to their usage of the co-op’s services through Capital Credit allocations and retirements. Capital Credits represent each member’s share of the Cooperative’s margins and ownership of the co-op.