This week Coastal Electric Cooperative will mail 3,829 checks totaling $698,772 to people who received electricity from the co-op in 1987 and 1988. Some 184 credits will be posted to accounts who are receiving a refund of less than $25.
To date, Coastal Electric Cooperative has retired more than $4.3 million in capital credits to members.
"Coastal Electric operates at cost — collecting enough revenue to run the co-op and serve new members but with no need to raise rates to generate profits for distant shareholders," said Whit Hollowell, Coastal Electric Cooperative CEO. "When the cooperative has money left over, it’s allocated back to our members as capital credits. When Coastal Electric’s financial position permits, the co-op retires, or pays, the capital credits to members in cash or as a bill credit."
"Retiring excess revenue to members helps distinguish cooperatives," Hollowell said. "We’re proud to support our communities by putting money back into the local economy and back into the pockets of those we serve. It makes our business model special."
Coastal Electric Cooperative holds onto allocated capital credits to cover emergencies and unexpected natural disasters like hurricanes, and to expand its electric system, all of which may require large-scale construction of poles and wires. This action decreases the need to raise rates or borrow money to pay for the infrastructure. After a number of years, if financial conditions permit, Coastal Electric’s Board of Directors may decide to retire a set amount of capital credits.
Members are annually allocated capital credits based on the amount of electricity they consumed during a year.
"Margins earned from electric revenues are the only real source of equity for not-for-profit electric cooperatives," said Laura McGee of Richmond Hill, a retired CPA and now Secretary-Treasurer of the Coastal Electric Cooperative Board of Directors. "When we need to borrow money to build and improve our power lines, our lenders look at our underlying financial strength. Strong and consistent equity levels are one key aspect of financial strength, so it’s essential for Coastal Electric to maintain the right balance between retiring capital credits to members and retaining sufficient equity on its balance sheet."