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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

Other businesses return profits to investors and stakeholders. Benton REA is different. We’re a not-for-profit, member-owned electric cooperative, and because of this, we return our profits, also called margins, to you, our member-owners.

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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 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 (Benton REA Profits) Allocated to Members?

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 a Capital Credit Payback?

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 written to members. Retirements less than $10 are accumulated year-to-year until the sum exceeds $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.

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.