One of NEC Co-op’s Biggest Perks: Capital Credits - NEC Coop
Apr 8, 2020 — News
Ask why any NEC Co-op member sticks around, and you’ll most likely get this answer: capital credits. This is our special way of giving back.
What are capital credits, and why is this benefit unique to electric cooperatives? Let NEC Co-op, your electricity company in Texas, walk you through what makes utility cooperatives different from your typical electricity provider.
How does an electric cooperative work?
NEC Co-op is a private, non-profit electricity provider, owned by the members we serve. Choosing to become a member of your local electric cooperative instead of relying on commercial utility companies reaps benefits.
Some of them include:
- Once you become a customer, you automatically share in the ownership. A co-op has member-owners, not just customers. Contrary to investor-owned utility companies, whose main aim is to make a profit, an electric co-op exists with a sole goal of providing its members with electricity.
- An electric co-op is focused on service, not profits. They provide dependable utility services to rural areas at the lowest rate possible while commercial companies target urban areas because they can make more profits on businesses and homes in those locations.
- Each member of the cooperative has a voice. Members enjoy a democratic organization wherein they get one vote in board member elections. They can also influence the company with their concerns and ideas and participate in policy-making.
- Co-ops are much more than electric companies. They are community-focused. They exist solely to provide benefits that really matter to its members, and work to enhance the well-being and sustainability of their local communities.
- The co-op sets rates based on how much it really costs to provide reliable electric service, make enough money to pay for operating costs and meet payment schedules on loans. Rates are designed so that the operating revenue exceeds the operating expenses. The balance between the revenues and expenses is called an operating “margin” and is allocated back to its members as capital credits. Simply put, capital credits are derived from the margins that the co-op has left after paying all of its expenses during the allocation period.
- Members receive margins based on the amount of electricity they consumed and purchased.
More people are seeing the value of partnering with a company that offers honest pricing, affordable and reliable power, and excellent service.
Ready to take your place as a valued member? Feel free to reach out to us at NEC Co-op Energy, your electricity company in Texas.
“Energy Cooperatives.” Co-OpLaw.Org, https://www.co-oplaw.org/knowledge-base/energy-cooperatives/.
“America’s Electric Cooperatives: 2017 Fact Sheet.” America’s Electric Cooperatives, https://www.electric.coop/electric-cooperative-fact-sheet/.
“The Cooperative Difference.” Touchstone Energy Cooperatives, https://www.touchstoneenergy.com/cooperative-difference.
“Utility Co-ops.” National Cooperative Business Association ClubUSA International, https://ncbaclusa.coop/resources/co-op-sectors/utility-co-ops/.