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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 (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?
An electric cooperative operates on an at-cost basis by annually “allocating” to each member, based upon the member’s purchase of electricity, operating revenue remaining at the end of the year. Capital credits represent the most significant source of equity for Benton REA. Since a cooperative’s members are also the people the co-op serves, capital credits reflect each member’s ownership in, and contribution of capital to, the cooperative. This differs from stock dividends that investor-owned utilities pay to shareholders, who may or may not be customers of the utility.

WHERE DOES THE MONEY COME FROM?
Member-owned, not-for-profit electric co-ops set rates to generate enough money to pay operating costs, make payments on any loans, and provide an emergency reserve. At the end of each year, we subtract operating expenses from the operating revenue collected during the year. The balance is called an operating “margin.”

HOW ARE MARGINS ALLOCATED?
Margins are allocated to members as capital credits based on their purchases from the cooperative—how much power the member used. Member purchases may also be called patronage.

HOW OFTEN DO MEMBERS RECEIVE CAPITAL CREDIT RETIREMENTS?
The Benton REA Board of Trustees makes a decision each year whether or not to retire capital credits. When the cooperative is strong enough financially and member equity levels high enough, the board directs staff to retire some portion of past years’ capital credits.

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

WHAT IF I HAVE MOVED?
If you move or no longer have electric service with Benton REA, it is important that you inform the cooperative of your current address, so that 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. If it has your current address, then Benton REA will send your retirement check by mail.

To date, Benton REA has paid more than $10-million dollars 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.

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