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For Electric Cooperative Members

Magic Valley EC News

The Benefits of Capital Credits

Board of Directors approves retirement of $5.5 million

There are so many perks that come with co-op membership, but capital credits are perhaps the best.

What are capital credits, you ask? Well, at the end of each year, Magic Valley Electric Cooperative calculates our operating margin, which is the amount by which income exceeded expenses. We then allocate that margin as capital credits to our members based on the amount of electricity that each member purchased throughout the year. But before those credits are actually paid out to members, we use the allocated but unretired funds to improve and expand our electric system and meet our other capital needs. This helps us avoid borrowing money and enables us to provide reliable, affordable electric service.

When our board of directors determines it’s financially feasible and prudent, those capital credits will then be returned, or paid out, to members. As an electric cooperative, we provide at-cost electric service. We aren’t here to make a profit, and we don’t have shareholders. As a member of an electric co-op, you invest in the efficient operation of your utility. Unlike an investor-owned utility, we don’t pay dividends to shareholders who don’t purchase electricity from us. Instead, our board of directors evaluates the cooperative’s financial position and capital needs each year and determines whether the co-op should retire capital credits.

When capital credits are retired, you might see them appear as a credit on your bill in a line labeled “Capital credits retirement” or a similar phrase, or you might receive a check. Either way, we’ll let you know how and when you’ll receive your capital credits retirement. To help ensure that you receive your retirement if you leave the cooperative, please provide us your updated address after you leave.

For 2021 MVEC’s Board of Directors has approved the retirement of $5.5 million in capital credits. The year 1999 will be fully retired while 2000 and 2019 will be partially retired.

Capital credits benefit all co-op members by keeping costs and electric rates as low as possible. The allocations help qualify us for cooperative status under federal income tax law and help keep our costs—and your rates—low.

Capital credits are just one of the many benefits of being a member of Magic Valley EC.