Capital credits,” “patronage dividends,” “patronage refunds” – these are all terms we use when we talk about allocating operating margins and retiring them to Clarke Electric Cooperative member-consumers. It’s one of the most important things we do as an electric cooperative and it’s what makes our business model unique.
This year, the CEC Board of Directors allocated $647,525 to CEC member-consumers from the 2019 margins patronage dividends. The board also voted to retire the patronage capital allocated in 2002 and a portion of 2003 not to exceed $300,000. If you were a member of CEC in 2002 and 2003, you should receive patronage dividends. Active (current) member-consumers will receive a credit to their primary electric account in December for the amount of their capital credit. This method results in significant savings of postage and labor costs for CEC and its member-consumers. Also, by applying capital credits to the December bill, the cooperative hopes to help offset the higher utility bills that many of our member-consumers see at this time of year.
Checks are mailed in December to inactive (former) member-consumers due a patronage dividend whose distribution amount is above the $5 minimum. Inactive account distributions of less than $5 will roll over to future years and a check will be issued when the minimum amount of $5 is reached.
How Do Capital Credits Work?
The CEC Board of Directors is responsible for authorizing the distribution of capital credits upon an annual review of the financial condition of the cooperative.
If you are wondering how patronage dividends work, here’s a quick overview. First, cooperative member-consumers share in the ownership of Clarke Electric Cooperative. When financial conditions allow, member-consumers receive patronage dividends. Here's how Clarke Electric membership pays you back:
- When you move into a home or establish a business in our service territory, you complete an application to become a member-consumer of the cooperative.
- A patronage dividend account is set up in your name and we carefully track your investment in the cooperative (how much electricity you pay the cooperative for) in this account.
- At the end of our fiscal year, any funds remaining after expenses have been paid are allocated* to your patronage dividend account based on the amount of electricity you used the previous year.
- Patronage dividends are based on the amount of electricity you use, so the amount you are allocated varies from year to year. Currently, we are on a less than 20-year payout rotation. This means, it will take 18 to 20 years to receive a patronage dividend credit or check.
- In the spring, the board of directors evaluates the financial condition of the cooperative to determine if we can pay patronage dividends. Dividends may not be paid every year.
- When patronage is not paid, it is used as operating capital for system improvements and maintenance. This operating capital reduces the need for loans, which helps keep costs down.
- When the board decides to pay patronage dividends, we calculate the amount we need to pay each member.
- Anyone who was a member in the years that are retired, will receive a credit on their December bill or former members will receive a check if the amount is above the $5 minimum. Inactive account distributions of less than $5 will roll over to future years and a check will be issued when the minimum is reached.
*Allocation vs. retirement
An allocation is made annually for each member-consumer, based on the amount of electricity purchased by that member-consumer the previous year. An allocation is the member-consumer’s share of the net margins Clarke Electric sets aside into a separate account. This money is used as operating capital for reliability improvements and maintenances over a period of years.
A retirement is the amount a member receives back as a patronage dividend. It is a portion of the total patronage balance. The amount paid is decided annually by the board of directors based on the financial needs of the cooperative. 37-13-08-04
Has Your Information Changed? Let Us Know!
It’s important for Clarke Electric to maintain updated contact information for our member-consumers. If you’ve had a recent change, contact the office at (800) 362-2154 with your new information.