As a member of an electric cooperative, you invest in Escambia River Electric (EREC) through your patronage (kilowatt-hour purchases). Each year, any margin (excess revenue) earned by EREC is reinvested in the cooperative. At the same time, the value of the margin is proportionally allocated (based on electric purchases during the year) and recorded to Capital Credit accounts for each of our members. These accounts are maintained until the credits are retired (paid) in full.
Capital Credits Faqs
The amount of capital credits earned each year is based upon the amount of utility services each member purchases annually from the cooperative. The more electricity and water purchased, the greater the capital credits earned.
No special action is required to start a capital credit account. As soon as you become a member with Escambia River Electric Cooperative and begin purchasing utilities you will have a capital credit account and will start earning capital credits.
Capital Credits are allocated annually after the finances for the previous year have been audited. EREC will keep a record of the amount of capital credits in the member’s account and at a future date when the Board of Directors determines that the financial condition of the cooperative will not be impaired, it will retire (or pay) to the member all or some portion of the member’s capital credits.
Allocated capital credits appear as an entry on the permanent financial records of the cooperative and reflect the member’s equity or ownership in EREC. When capital credits are retired, a check or bill credit is issued to the member, and their equity in the co-op is reduced accordingly. EREC maintains individual capital credit records for each member account.
Not necessarily. Pursuant to the cooperative Bylaws, the Board of Directors has the discretion to authorize a retirement of capital credits when it determines that the financial condition of the cooperative will not be impaired by doing a retirement. When considering a retirement, the board analyzes the financial health of the cooperative, taking into consideration the fact that EREC must constantly build, repair and maintain equipment and lines to keep the utilities running safely and smoothly in our members’ homes. Capital credits represent members’ equity in the cooperative and reduce the amount of money we must borrow to keep our equipment and lines in good condition. The less we have to borrow means we save on interest and can therefore keep electric rates lower.
A member’s capital credits remain on the books in their name and member number until they are retired. Because retirements can be made years after credits are earned, the member should ensure that EREC always has their current mailing address because EREC will send retirements to the last known address for the member.