Capital Credits

On October 26, 2010, Karnes Electric Cooperative, Inc.’s board of directors authorized the return of $274,975 in capital credits to the cooperative’s members. KEC members with current active accounts received a capital credit refund in the form of a credit on their November 2010 bill. Any members no longer receiving service from KEC will have a check mailed to them.

You’ve probably heard of profit sharing for people who work for employee-minded companies. But did you know that a rural electric cooperative that sells electricity hands its profits back to its consumers?

Rural electric cooperatives are nonprofit businesses. They charge a fair rate for electricity and use the money to make sure there’s enough power to go around. They use it to maintain their equipment, pay their staff and run the business. Anything that’s left over is returned to the customers.

Cooperative employees don’t even refer to the money as “profit” because they know the utility isn’t going to keep it. There are no stockholders to pay because cooperatives are owned by the people who buy their services, not by investors. So “margins” is the word that cooperative employees use for the money left over after all expenses are paid. And they call the refunds they send to their consumers “capital credits” or “patronage dividends.”

Getting a capital credit refund is a bonus that consumers get for buying their electricity from a cooperative. Another bonus is that those consumers are actually members – and part owners – of the cooperative rather than just customers. So capital credits are a benefit of membership.

Including the amount authorized for return in 2010, the capital credits returned a total of $3,991,030.

Karnes Electric Cooperative, Inc. is proud of its 71-year heritage of providing electric distribution power in 12 South Texas and Coastal Bend counties.