Mohave Electric Cooperative operates as a not-for-profit corporation. The revenues from the sale of electricity are used to pay the operating expenses of the Cooperative and make payments on loans for improvements that the Cooperative has outstanding. The remaining funds are not profits; they are called margins.
WHERE DO THE MARGINS GO?
As a member, you are eligible to receive a portion of the margins. We call your share of the margins “Capital Credits” because the margins originate with the money (or “capital” in financial terms) you pay to the Cooperative when you buy electricity. Because your Capital Credits build up over the years, as you continue to take service from the Cooperative over a period of time, we establish a capital credit account for every member, and then allocate your share of margins to your capital credit account on an annual basis.
HOW ARE CAPITAL CREDITS PAID TO ME?
One question often asked is “Why can’t you just pay all my Capital Credits at once?” There is a legal procedure set forth under the Cooperative’s bylaws for issuing Capital Credits. Your elected Board of Directors can only vote to pay out a portion of available Capital Credits to members when doing so won’t harm the Cooperative financially.
HERE’S HOW IT WORKS:
Once a year, the Board of Directors can vote to “retire” (pay out) a prudent percentage of Capital Credits available for given years if circumstances allow. Once the decision is made to retire Capital Credits, you may receive funds based on how much of the margins can be released from specific years. If you were a member during any of the years for which Capital Credits are being retired, you are eligible for the retirement.
HOW LONG DO THESE PAYMENTS CONTINUE?
Retirement of Capital Credit funds built up in your account could be paid out to you for many years to come – even if you move away and no longer have an active account with Mohave Electric. Also, Capital Credits can be retired to the estates of deceased members. The Board of Directors can approve payments to estates based on discounted present values. Former members and the estate of deceased members should keep the Cooperative informed of their current address to promptly receive Capital Credit checks when a retirement is declared.
HOW MUCH DO I GET?
Once a year you will get a Capital Credits allocation notice on one of your monthly bills. Also, you may contact us to inquire about capital credits. When the Board of Directors declares a retirement, you may get a Capital Credits retirement check or a credit on your account. The amount returned to you is based on a formula involving your Capital Credits balance, the amount available for retirement for the specific year or years, and then the amount of revenue the Cooperative got from electricity you purchased that year. Capital Credits are just one of the many advantages of being a member. Besides, getting a check in the mail or an account credit is a nice reminder that you are more than a utility customer– you are someone with a stake in the future of your Cooperative.
We like to issue capital credit payments.
It’s a rewarding way to say: