This week week, 6,283 Coastal Electric Cooperative members will get a welcomed surprise, just in time for the holidays.
The co-op will retire over $1.8 million in capital credits to members Coastal Electric served from 1988-1991. Most of those people will receive checks, to be mailed Wednesday. Active members who are getting less than $25 in capital credits will see the return as a separate line item credit on their December electric bills.
“Capital credits are just one benefit of being served by a not-for-profit, community-owned electric cooperative,” said Coastal Electric CEO Whit Hollowell. “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.”
The retirement of capital credits — so-called because members provide capital to the cooperative for it to operate and expand — depends on the co-op’s financial status.
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.
To date, Coastal Electric Cooperative has retired more than $6 million in capital credits to members.
According to Hollowell, those who received electric service from Coastal Electric Cooperative from 1988-1991 don’t have to take any extra steps to claim their capital credits retirement, except watching the mailbox after Dec. 12 or looking for the line item credit on their December electric bills.
“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.
“The Co-op board tries to do a good job of striking that balance. That contributes to our ability to receive attractive rates on our construction loans, which in turn helps us keep costs low.”
Coastal Electric Cooperative is a not-for-profit, community-owned electric cooperative providing electricity and related services to more than 19,000 member-consumers in Bryan, Liberty, Long and McIntosh counties.