What are Capital Credits?
Rural electric cooperatives such as Anza Electric Cooperative Inc. (AEC) are different from investor-owned utilities (IOUs), whose primary objective is to make a profit. A rural electric cooperative is a nonprofit business that exists solely to provide its members with electricity.
Nonprofit electric cooperatives such as AEC deliver energy to their members at the cost of service. IOUs typically distribute their profits to investors across the nation or even the world—not necessarily to those they serve.
Capital credits come from the margins that the cooperative has left after paying all of its expenses in a given year.
They represent your share of the Cooperative's margins - margins are the operating revenue remaining after operating expenses in a given year. The amount assigned in your name depends on your energy purchases. To calculate this, we divide your annual energy purchase by the Cooperative's operating income for the year. The more electricity you buy, the more capital credits you earn.
Almost every year since 1989 the AEC board of directors has approved the retirement of capital credits. The decision to retire Capital Credits each year is made by the Board of Directors. The retirement amount varies and is based on the amount necessary to maintain financial soundness of the cooperative.
Since 1989, AEC has returned more than $7 million to its members.