As a member-owned cooperative, Peace River Electric Cooperative operates as a not-for-profit utility. One cornerstone of the cooperative business model is the allocation and retirement of Patronage Capital. This is the two-step process that returns margins to the member-owners of the cooperative.
Each year, any revenues received in excess of expenses – referred to as “margins” – are deemed Patronage Capital and set aside in the form of Capital Credits. These margins are allocated to each member in proportion to the amount of electricity they purchased that year. This allocation of Capital Credits is the first step.
PRECO maintains a Capital Credit account for all past and present members of the Cooperative. Each member accumulates the Capital Credits allocated to them in this account until they are paid – or “retired.”
In order to meet our financial obligations, such as long- and short-term debt, replacement of aging infrastructure and construction of new power lines – to name just a few – PRECO retains these Capital Credits for a period of time. Holding on to these margins allows PRECO to build equity. Co-op equity allows us to secure low-cost loans and reduce the amount of money we need to borrow.
The Cooperative disburses or returns these Capital Credits when it is financially feasible to do so. When Capital Credits are “retired,” your equity is returned to you. This disbursement completes the allocation and retirement process.
Capital Credits Q&A
Peace River Electric Cooperative, Inc., is a not-for-profit organization. Any revenues — called margins — remaining after all expenses have been paid, are allocated to members in the form of Capital Credits. Capital Credits represent each member’s share of the co-op’s margins.
Every year, the Board of Directors decides whether to retire Capital Credits based on the financial health of the Cooperative. Capital Credits are typically retired annually in December. The oldest retained Capital Credits are returned first.
Allocated Capital Credits appear as an entry on the permanent financial records of the co-op and reflect your equity or ownership in PRECO. When Capital Credits are retired, a check is issued to you and your equity in the co-op is reduced.
PRECO allows early retirement for a deceased member.
PRECO strives to deliver Capital Credits to former or current members who have moved from their last known address or did not cash a check that was mailed to them. When funds are not claimed within 3 years after payment, these funds revert to the Cooperative.
PRECO bylaws provide for early retirement of the Capital Credits of deceased members to their estate. Representatives of a deceased member’s estate may contact the cooperative at 800-282-3824 for more information.
Upon the death of either spouse in a joint membership, the name of the deceased person is removed from the membership and the membership is then held solely by the surviving spouse. A joint membership is not eligible for an early retirement upon the death of one of its members.
For more information contact Customer Care at 800-282-3824.