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Capital Credits

Capital Credits
Benton REA is a not-for-profit, member-owned electric cooperative. When you signed up to receive electric service from Benton REA, you became a member-owner. Benton REA allocates and periodically retires (pays) capital credits (also called patronage dividends, patronage refunds, patronage capital or equity capital) based on how much electricity you purchased during a year.

Members receive capital credit retirements through a check in the mail, reflecting their contribution of capital to, and ownership of, the cooperative. Benton REA determines your share based on your total accumulated capital credits through the percentage of equity method. For more information on this part of the cooperative business, read the following Q & A:

COMMON CAPITAL CREDITS QUESTIONS:

WHAT ARE CAPITAL CREDITS?
Capital credits are a unique benefit of belonging to a cooperative. A not-for-profit electric cooperative operates on an at-cost basis by annually allocating margins (profits) at the end of the year to each member based upon the member’s purchase of electricity. The allocation of margins is called capital credits. Since Benton REA members are also the people we serve, capital credits reflect each member’s ownership in and contribution of capital to Benton REA.
Benton REA allocates and periodically retires―or returns―capital credits to the members. Members receive capital credit payments through a check in the mail. The capital credit check is your return of capital that you contributed to Benton REA. Benton REA determines your share based on your total accumulated capital credits, or your equity. This is called the percentage of equity method. The electricity you purchase increases your equity while the capital credits you receive decreases your equity.

WHERE DOES THE MONEY COME FROM?

Member-owned electric cooperatives set rates to generate enough money to pay its operating costs and make payments on any loans. At the end of each year, operating expenses are subtracted from the operating revenue collected during the year. The difference is called an operating margin.

Benton REA works hard to keep your rates as low as possible. But it’s nice to know that when there are margins, they go back to our member-owners.

HOW ARE MARGINS ALLOCATED?
Margins are allocated to members in the form of capital credits. Each member’s capital credits are based on the amount of electricity purchased from the cooperative during the year.

HOW OFTEN DO MEMBERS RECEIVE CAPITAL CREDIT RETIREMENTS?
Annually, Benton REA’s Board of Trustees makes a decision on whether or not to retire—or return—capital credits to the members. When the cooperative is strong enough financially and member equity levels are high enough, the board directs staff to retire an amount of capital credits, which is distributed using the percentage of equity method.

HOW WILL THE RETIREMENT WORK?
Benton REA members traditionally receive a check in December. Due to the expense involved in processing printed checks, $10 is the minimum retirement check amount that will be issued to members. Retirements less than $10 are accumulated year-to-year until the sum is equal to or greater than $10.

WHAT IF I HAVE MOVED?
If you no longer have electric service with Benton REA, it is important that you inform Benton REA of your current address so future retirements can be properly mailed to you. You are entitled to a capital credit retirement, even if you move out of the Benton REA service area.
Since we were formed in 1937, Benton REA has paid more than $11 million in capital credits back to its member-owners.

For more information about capital credits, contact Benton REA at 509-786-2913 or info@bentonrea.org.

 Contact us at 1-800-221-6987

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