Capital CreditsAllen Duke2020-09-29T15:15:18-08:00
Because BUECI is a cooperative owned by its members, it doesn’t earn profits. However, when revenues exceed expenses, the cooperative does earn margins. Each year, those margins are allocated to members in the form of capital credits, which reflect member ownership in BUECI, and the cooperative uses members’ capital to fund operating activities and reduce borrowing, with the intent of later repaying that capital back to members.
The capital funds are generally repaid on a cycle that matches the average life of the utility’s plant assets – the facilities and equipment used to provide utility services including things like electrical generation turbines, power poles, and water tanks. In years past, the Borough provided much of the Cooperative’s plant assets, so the repayment cycle was 12 to 15 years. However, plant assets constructed 2010 to present are largely paid for by you – the members, so the average plant life – and therefore the capital credit repayment cycle – has increased to 25 to 31 years.
After reviewing the cooperative’s finances each year, the BUECI Board of Directors determines whether a portion of capital credits can be retired, or returned, to members. The Board also evaluates the method, basis, priority and timing of all capital credits retirements. Because capital credits are based on the dollar amount of utility services a member purchases, the retirement amount will vary from member to member and from year to year.
Annually, the BUECI Board of Directors reviews the financials of the Cooperative to determine if capital credits will be issued. The board evaluates financial ratios which are significantly affected by investment in long-term plant assets such as electric generation facilities and water production facilities.
Frequently Asked Questions
Q: When can I expect to receive my capital credits refund?
A: Capital credits refunds of $10.00 or less will be credited to active members’ January bills. Capital credits refunds over $10.00 will be mailed as checks to active members in December/January. All payments to prior members will be mailed in December/January. Capital credits are automatically applied to accounts with a balance owing to the Cooperative which are 60 days or greater past due, then the balance is mailed to the member if the remaining balance exceeds $10.00.
Q: Why do I get a capital credits refund?
A: Capital credits are each member’s share of margins determined by how much utility service was purchased during the year and the rate under which the member was billed. The return of capital credits sets utility cooperatives apart from other business forms. One of the seven cooperative principles is to operate on a not-for-profit basis by returning any net savings to members on the basis of their patronage.
Q: I am a new member. When will I start receiving capital credits refunds?
A: Most members will begin receiving a refund after 30 to 31 years of utility service. Refunds are generally issued in December, pending board approval.
Q: How does the cooperative determine the amount of my capital credits refund?
A: The board of directors determines and approves the total refund amount annually based on the cooperative’s margins. The board has to ensure the cooperative is financially stable to refund capital credits by working closely with the management team on financial planning.
Q: I have lost my capital credits check. Will the cooperative send me a new one?
A: The cooperative will be happy to replace lost refund checks. There is a one week hold required first, to make sure the original check does not clear the bank account. Reissuance remains subject to original issuance requirements that no amount greater than 60-days be owed to the cooperative.
Q: I no longer live within the cooperative’s service territory. What happens to my capital credits?
A: Each member is entitled to continue receiving an annual capital credits refund based on the time he or she received utility service from BUECI. Please remember to notify the cooperative of all address changes to ensure prompt delivery of the refund.
If you have questions about capital credits, contact BUECI at 907-852-6166 between 8:00 AM to 12:00 PM and 1:00 PM to 5:00 PM, Monday through Friday.
Please remember to include your name, account number, mailing address, physical address and the best phone number to reach you, and we will contact you after researching your account.