PRECO Members Receiving $2.5 Million in Capital Credits

Posted: December 1, 2021 at 9:32 am

Peace River Electric Cooperative is a not-for-profit electric distribution utility whose members share in the ownership and prosperity of the cooperative. Your participation in Capital Credits is one of the benefits of being a PRECO member.

Electrical outlet next to a piggybank
Since 2000, PRECO has refunded more than $20.6 million in Capital Credits to its members.

Allocation and Retirement of Capital Credits

PRECO returns Capital Credits to members through a two-step process called Patronage Refund.

Step 1: Allocation

We allocate Capital Credits to the member’s account in the year margins are received. Margins are our revenues collected over expenses incurred for the year. PRECO prorates margins to its members according to the member’s total annual billing for that year.

Step 2: Retirement

When it is financially feasible, PRECO completes the process by retiring (paying) these Capital Credits to the members who contributed the Patronage Capital.

PRECO is retiring more than $2.5 million in Capital Credits to members who received electric service during 1999  and 2000. Qualifying members with an active PRECO account and retirement less than $50 will receive a credit on their November or December electric bill. We will disburse all other retirements by check in December.

For questions regarding Capital Credits, call us at 800-282-3824.

So What is a Capital Credit?

You may often hear the term “capital credits” at Peace River Electric Cooperative, but what are
they?

Capital credits are a feature that make PRECO different from investor-owned utilities. As a
member-owned co-op, PRECO does not earn profits.

While all utilities must collect revenue to cover expenses and plan for future investments,
investor-owned utilities design rates to maximize profits, allowing them to pay dividends to
stockholders.

PRECO sets rates to cover costs, plan for growth, maintain good financial parameters and provide stability.

When revenues exceed the cost of doing business, the co-op earns net margins, which are allocated to active members in a ratio proportionate to the amount of electricity the member purchased during the year the net margins were earned. Those are called capital credits.