This month, members have begun to receive a credit on their July bills under the line item “Capital Credit Retirement,” which will be subtracted from any account charges.
These retirements are being issued by Northern Neck Electric Cooperative and our generation-and-transmission cooperative, Old Dominion Electric Cooperative.
In total, members will be receiving $1,037,094. Retiring capital credits to members is one of our key cooperative principles at NNEC and ODEC. Members share the costs, the investments and the “margins” of NNEC. Members will receive a capital credit partly due to the fiscal responsibility maintained by the board of directors, our executive team and every member of our team. We take being a steward of our members’ investment seriously.
At the end of each year, NNEC calculates its margins (referred to as “profits” by investor-owned utilities and other companies) by taking the amount of money the co-op receives from its members during the year and subtracting the costs of providing electric service.
We then allocate any margins as “capital credits” to each member based on the amount of electricity they purchased throughout the year. When the NNEC Board of Directors determines it is financially achievable and prudent, and when NNEC meets other financial requirements of lenders, the co-op retires a portion of the capital credits to its members.
In the interim, the co-op will use the allocated, but unretired, capital credits to improve and expand its electric system, and meet other capital needs. Capital credits help to reduce the amount of debt the co-op has to borrow, which also keeps service costs down. The bottom line: Capital credits are just one of the many benefits of being a member of NNEC.