Capital Credits

Sharing the Benefits of Membership

What are capital credits?

Mohave Electric Cooperative (MEC) operates as a not-for-profit corporation. When signing up for electric service with MEC a $5 membership fee is paid to become a member of the Cooperative. Capital credits are a benefit of Cooperative membership. The revenues from the sale of electricity are used to purchase wholesale power, pay operating expenses, make payments on outstanding loans, and provide a financial reserve as a condition of lenders. Any remaining funds are called margins. Capital credits are the accumulation of the Cooperative’s margins. MEC established a capital credits account for each member. Each year, the margins, if any, are allocated as capital credits to all members who purchased electricity during that year.

How are capital credits paid to members?

Once a year, the Board of Directors can vote to retire, or pay out, a portion of capital credits for a specific year or years, when doing so will not harm the Cooperative financially. Members who purchased electricity from MEC during those years are eligible to receive a prorated share of the retired capital credits. A question asked is, “Why can’t MEC pay all my capital credits at once?” MEC’s bylaws set forth a legal procedure for issuing capital credits. This procedure allows only a portion of capital credits to be retired so as not to harm the Cooperative financially. MEC may retain capital credits for a period of time in order to reduce the need for borrowed funds and the payment of interest expense.

How much do I get?

When the Board of Directors declares a retirement of capital credits, members may get a capital credits check or a credit on their monthly bill if they have active service with Mohave Electric. The amount returned to each member is based on a formula involving their capital credits balance, the amount available for retirement for the specific year or years, and the amount of revenue the Cooperative got from electricity they purchased that year. Former members are encouraged to notify MEC of their mailing address changes. By law, the Cooperative must mail out capital credit retirement payments to the last known address of the former member.

How long do I keep getting payments?

Capital credit funds accumulated in your capital credits account could be paid out to you for many years — even if you move away and no longer have active service with Mohave Electric. It is important that former members keep MEC informed of their current address in order to promptly receive capital credit checks when a retirement is authorized, and checks are mailed out. Capital credits can also be paid to estates of deceased members with proper documentation. The Board of Directors can approve payments to estates under conditions of early retirement.

2020 Capital Credits

MEC’s board of directors has authorized a capital credits return of $1.3 million to members. MEC members who had electric service in 1988 or 2019 will receive their share as a check, or as a bill credit on active service accounts for amounts less than $10.00.

“One of the benefits of being a member of Mohave Electric Cooperative is that members share in any margins earned,” said Ardie Lauxman, chief financial officer of MEC. “If MEC has a positive margin and meets our lender’s requirements, the board of directors may vote, once a year, to retire, or pay out a portion of available capital credits to members.

Lauxman said checks will be mailed in June.

MEC CEO Tyler Carlson said, “We recognize the importance of retiring as much as we could afford to this year, as we try to help our members cope with the COVID-19 financial impacts.”

Since 2015, MEC has returned $8.5 million in capital credits to members.

Lauxman explained that MEC operates as a not-for-profit corporation. Revenues from the sale of electricity are used to purchase wholesale power, pay operating expenses, make payment on outstanding loans, and provide a financial reserve as a condition of lenders. Any remaining funds are called margins and are allocated to members as capital credits.

Additional information on capital credits is available at MEC’s member service office located at 928 Hancock Rd in Bullhead City, Az.

Abandoned Capital Credits