MEC may retain capital credits for a period of time in order to reduce the need for borrowed funds and the payment of interest expense. This procedure allows only a portion of capital credits to be retired so as not to harm the Cooperative financially. A question asked is, “Why can’t MEC pay all my capital credits at once?” MEC’s bylaws set forth a legal procedure for issuing capital credits. Members who purchased electricity from MEC during those years are eligible to receive a prorated share of the retired capital credits. Once a year, the Board of Directors can vote to retire, or pay out, a portion of capital credits for a specific year or years, when doing so will not harm the Cooperative financially. Each year, the margins, if any, are allocated as capital credits to all members who purchased electricity during that year. Capital credits are the accumulation of the Cooperative’s margins and MEC establishes a capital credits account for each member. Any remaining funds are called positive margins. The revenues from the sale of electricity are used to purchase wholesale power, pay operating expenses, make payments on outstanding loans, and provide a financial reserve as a condition of lenders. Sharing the Benefits of Membership What are capital credits?
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