Northern Lights, Inc. electrical cooperative will distribute over one million dollars of capital credit refund checks this month to its members who purchased power in 1987 and 1988.
Capital credits are one of the unique features of a cooperative, and represent the members’ ownership in the organization. Capital credits serve to build and maintain reserves.
“The Northern Lights Board of Directors is pleased to return these capital credits to our members, and to have the million dollars flow back into the local economy,” said NLI Board President Steve Elgar.
A benefit of being a member of an electric cooperative is that electric service is provided on a cost basis. Investor-owned utilities, unlike cooperatives, earn a profit and pay a portion of their profits back to the stockholders as dividends. At NLI, revenue collected in excess of costs is allocated back to the member-owners based on the amount of electric usage during the year. This allocation is called “capital credits.” Capital credits represent the ownership each member has in the cooperative.
Every year, after the books have been closed and audited, capital credits are allocated to members based on the amount of revenue each member provided. These amounts are then recorded, and members are notified of the amount of capital credits allocated to them that year.
The NLI Board of Directors reviews the financial position of the Cooperative, and every year determines how much capital credits allocated from previous years will be refunded to the members in cash. The Board considers the level of reserves, future need for capital, and the equity level of the Cooperative.
NLI members may donate their capital credit checks to community organizations through the Northern Lights’ Community Trust, which distributes funds to assist local charities, such as food banks. NLI members also can choose to donate their capital credit checks to the NLI Helping Hand Project, which helps members with their electric bills.