Northern Electric Cooperative is a non-profit, which means we operate at cost. We give profits back to our members, rather than outside investors or shareholders, through a process called capital credits. Applicable members received a message on their July bill, notifying them about their share of the co-op’s profits. On your July bill, it was called your allocation.

Here’s how capital credits work:

Northern members use the electricity we provide and pay their monthly bills. We track your business with the co-op, to ensure each member’s capital credits are proportional to their payments. The profits from each year are set aside, earmarked to be returned to the members. Those funds are not paid back to the members in the same year. Northern Electric uses the money to meet the financial needs of the co-op.  When financial conditions permit, the co-op’s board of directors votes to pay capital credits back to the members.

This year, Northern Electric will retire capital credits from 1995-1999. In addition, Northern passes on the credits we get from our Generation and Transmission cooperatives, East River Electric and Basin Electric Power, to our members. Our G&Ts are retiring over 90% of capital credits from 2004.

Frequently asked questions

Q: What are capital credits and how do they work?

A: Capital credits represent a member’s portion of the revenues for the cooperative. Consumers are members of an electric cooperative simply by using the services of the co-op. Capital credits consist of any revenues in excess of actual operating costs of the cooperative.

Members are notified every year about their portion – or allocation – of capital credits from the previous year. Over time, a percentage of a member’s allocation is paid back – or retired – in the form of a bill credit as the financial condition of the cooperative allows.

Q: When are capital credits returned to members?

A: Capital credits are paid back – or retired – at the direction of the Northern Electric Cooperative Board of Directors. The Board of Directors votes every year to decide if a percentage of the capital credit allocations can be paid back to members. If capital credits are paid back it will appear as a credit on September bills. Former members who have moved off Northern’s lines will receive a check.

Q: What should a member do if they move out of the Northern Electric service territory?

A: If a member discontinues service with Northern Electric it is important to notify the co-op of any address changes so capital credit payments can continue to be made to that member in the future. Members will not receive a lump-sum refund check when they discontinue service with Northern Electric but will continue to receive a check based on the annual decisions of the Board of Directors.

Q: What happens to the capital credits of a deceased member?

A: Northern Electric also needs to be notified by a relative or legal representative when a member of the co-op passes away so that the account can be closed or transferred to another name. Northern Electric will refund the deceased member’s capital credits to their estate in a lump-sum payment if the account was listed solely in that member’s name and is closed. For an estate to receive a refund, a relative or representative must provide the co-op with documentation which designates them as a legal representative of the estate.

For further questions on capital credits please call the Northern Electric office at 605-225-0310.