Q: I received a letter entitled, “Capital Credit Allocation Notice”. I don’t understand what capital credits are. Can you explain? (August, 2014)
Capital Credits are one of the benefits of being a member of a non-profit cooperative like Clearwater Power Company.
Basically, we take the money left over at the end of the year that would be profit in an investor-owned utility (IOU) and we divide it among the members according to how much electricity they purchased from us last year. The letter you mentioned lets you know how much your allocation was for the previous year. Your allocation total is then held in an account in your name. It is your equity in the cooperative (because remember, you are an owner).
So, many people ask, why we hold the money and don’t simply pay it out right now? Well, we use that money to reduce the amount the cooperative has to borrow to operate, maintain and expand. Each year, the Board of Directors determines if the cooperative is financially able to pay prior years’ capital credits back to the members. Typically, these credits were accrued around twenty years prior. When so approved, the cooperative refunds designated prior year’s capital credits, by check, to members who used electricity during the designated years.
To date, Clearwater Power has refunded capital credits every year since 1988 totaling over $8.4 million in actual payments back to members. That is something you don’t see at an IOU!
If someone moves off of our lines, it is very important for them to update their address with us. To view a list of unclaimed credits visit: clearwaterpower.com/capitalcredits