About Capital Credits Nueces Electric Cooperative is organized as a cooperative, owned by its members. As a cooperative, Nueces Electric Cooperative does not earn profits. Instead, any revenues and other income over and above the cost of doing business during a given year are considered "margins." Margins are treated as capital contributed by the membership to the cooperative to help reduce the cost of borrowing and hold down rates. Margins are used for a variety of operating and capital costs and are typically repaid in the future to the members of record for the year in which they were earned. The Nueces Electric Cooperative Board of Directors decides each year how much of these margins need to be retained by the cooperative to keep it financially strong, and how much should be allocated back to the members. A percentage of the margins (determined by the Board of Directors) are allocated to each member of the cooperative who bought services from Nueces Electric Cooperative during the year these margins were earned. Allocations are placed in a member’s capital credit account held by the cooperative and are called “capital credits.” The actual dollar amount so "credited" will vary from member to member because it is based upon total individual annual purchases. Each member's capital credit account may reflect accumulated allocations over the period of years that the member continues to receive service. Your annual “Capital Credits Allocation Notice,” issued to co-op members, shows the individual member's capital credits allocation for a given year. This represents your individual share of the margins and it is represented by an accounting entry in Nueces Electric Cooperative records. An allocation is not the same as stock or cash. Nueces Electric Cooperative’s financial statements reflect “current member equity” refers to the dollar value of a member's allocated — but not yet retired — capital credits. Allocated credits are typically paid to the members in cash over time through a process called “capital credits retirement.” The Nueces Electric Cooperative Board of Directors usually considers a retirement of capital credits annually. When a capital credits retirement is authorized by the Board, both the dollar amount and year(s) to which the allocations relate are specified when refunded - in the form of a bill credit or, if no longer a member of the co-op, a check. If you are no longer a member, no checks are issued if your refund amount is less than $5. In that case, your refund will be issued during a future retirement when the total of your retired capital credits exceeds $5.
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