My Ownership and Capital Credits It pays to be a Member

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You are a Member and an Owner of Benton REA

By purchasing electricity from Benton REA, you became a member and an owner of the cooperative.  So, what does this mean?

Being an owner of an electric cooperative does not mean you own poles, wire and transformers. Your ownership is reflected in other ways, such as your vote. Members vote on important issues and who from the membership will represent them on the Benton REA Board of Trustees. As a member and an owner, you also can become a Trustee if you wish to represent your district and are elected by the members within it.

The other way your ownership is reflected is in your capital credits, which are your equity share of Benton REA.

Capital Credits - Your Equity in Benton REA

All utilities have margins, but only electric cooperatives, like Benton REA, allocate and, over time, pay back those margins to its members.

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Since formed in 1937, Benton REA has paid more than $13.8 Million in capital credits back to its member-owners.

For more information on this part of the cooperative business, read the following Q & A:

COMMON CAPITAL CREDITS QUESTIONS:

As a Member-Owner, What Do I Own?

Being an owner of an electric cooperative does not mean you own poles, wire and transformers. Your ownership is reflected in other ways, such as your vote. Members vote on important issues and who from the membership will represent them on the board of trustees. Your ownership is also reflected is in your capital credits, which are your equity share of Benton REA.

What Are Capital Credits?

Capital credits are a unique benefit of belonging to a cooperative. All utilities have margins, but only electric cooperatives like Benton REA allocate and, over time, pay back those margins to its members.

Benton REA operates at-cost by annually allocating margins to each member based upon their purchase of electricity. The allocation of margins is called capital credits. Capital credits reflect each member’s ownership in and contribution of capital to Benton REA.

If the co-op has margins in the year you purchased electricity from Benton REA, your equity increases. Likewise, the capital credit retirement you receive decreases your equity by the amount of your check. Benton REA determines your retirement amount based on your total accumulated capital credits through the percentage of equity method. Additionally, the board has the authority to pay back one or more of the oldest years’ equity to members.

Where Is the Percentage of Equity Method?

Each member’s total capital credits from past years’ allocations are divided by the total allocation of all members to determine what percentage of equity each member holds. Each member’s allocation is a percentage of the total allocation, or total equity, of all members of the cooperative. That percentage of equity is the amount that has been authorized by the board of trustees for payment (retirement).

When capital credits are paid (retired), each member’s percentage of equity is multiplied by the total dollar amount the board of trustees authorizes to retire. This is why the amount each member is allocated does not match the amount they receive in retirements each year.

Where Does The Money Come From?

Benton REA charges enough 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 electric bills as low as possible. But it’s nice to know that when there are margins, Benton REA allocates and returns them to you over time.

How Are Margins Allocated to Members?

Each member’s capital credits are allocated based on the amount of electricity they purchased from the co-op during the year.

How Often Do Members Receive a Capital Credit Payback?

The annual decision to pay (retire) capital credits rests solely with your board of trustees and is dependent on the financial condition of the cooperative and the provision of its bylaws. Retirements are traditionally made in December.

How Does the Retirement Work?

Due to the expense involved in processing printed checks, $10 is the minimum retirement 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’s important that you inform Benton REA of your current address so future retirements can be properly mailed to you. You are entitled to your capital credits even if you move away.

For more information about capital credits, contact Benton REA at 509-786-2913.

7 COOPERATIVE PRINCIPLES:

Open and Voluntary Membership

Membership in a cooperative is open to all persons who can reasonably use its services and stand willing to accept the responsibilities of membership, regardless of race, religion, gender, or economic circumstances.

Democratic Member Control

Cooperatives are democratic organizations controlled by their members, who actively participate in setting policies and making decisions. Trustees are elected from among the membership and are accountable to the membership. In primary cooperatives, members have equal voting rights (one member, one vote); cooperatives at other levels are organized in a democratic manner.

Members’ Economic Participation

Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital remains the common property of the cooperative. Members allocate surpluses for any or all of the following purposes: developing the cooperative; setting up reserves; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership.

Autonomy and Independence

Cooperatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control as well as their unique identity.

Education, Training, and Information

Education and training for members, elected representatives, CEOs and employees help them effectively contribute to the development of their cooperatives. Communications about the nature and benefits of cooperatives, particularly with the general public and opinion leaders, helps boost cooperative understanding.

Cooperation Among Cooperatives

By working together through local, national, regions and international structures, cooperatives improve services, bolster local economies, and deal more effectively with social and community needs.

Concern for Community

Cooperatives work for the sustainable development of their communities through policies supported by the membership.