About Capital Credits
As a not-for-profit electric cooperative, one of the many unique features of our business model is that margins realized at the end of a year after operating expenses are paid and returned to members in the form of capital credits.
Click here for a brochure about Capital Credits.
Click here for Capitals Credits FAQs.
Capital Credits Process
- Butler Rural Electric Cooperative is a not-for-profit organization. Owned by its member-consumers, the money to cover day-to-day operating costs of the cooperative comes directly from the members paying their monthly electric bills.
- At the end of the year, Butler Rural Electric Cooperative subtracts operating expenses from the amount of money collected and the remaining balance is called the margin. The margins left over at the end of the year are allocated, or assigned, to your capital credit account based on individual patronage (the amount of money you pay for your electric bill each year).
- Your capital credit account, similar to a bank account, is the accumulation of margins that have been allocated to you each year based on your patronage. At the end of each year, the cooperative deposits your allocated patronage into your capital credit account.
- From time-to-time, the board of trustees retires capital credits based upon the financial stability of the cooperative. The board of trustees was delegated this responsibility in the cooperative’s code of regulations.
- If the board chooses to retire capital credits, the cooperative will withdraw money from your capital credit account and send it to you in the form of a check (unless you choose to apply it to your bill).
You can use the capital credits statement you receive in February for tax purposes. We recommend you refer any questions you have to a tax professional.
Definitions of Capital Credits Terms
Allocation- An approved method used to assign the margins to an individual’s capital credit account.
Margin- At the end of the year, Butler Rural Electric Cooperative subtracts operating expenses from the amount of money collected and the balance is called the margin.
Member- At the cooperative, you are more than a customer, you are a member-owner.
Operating Costs- The cost to maintain, repair and construct the electric system (poles, wires, substations, etc.).
Patronage- At the cooperative, your patronage is the amount of money you paid on your electric bill each year.
Retirement- A payout from your capital credit account. The cooperative withdrew money from your capital credit account and sent you a check based on the board’s approval of capital credit retirement.