What is patronage capital?
Because CREC is a cooperative, owned by its members, it does not technically earn profits. Instead, any revenues over and above the cost of doing business are considered “margins.” These margins represent an interest-free loan of operating capital by the membership to the cooperative. This capital allows CREC to finance operations and – to a certain extent – construction, with the intent that this capital will be repaid to you in later years.
What’s the difference between allocated and retired patronage capital?
Allocated patronage capital appears as an entry on the permanent financial records of the cooperative and reflect your equity or ownership in CREC. When patronage capital is retired, a check or bill credit is issued to you and your equity in the cooperative is reduced.
How often will I receive an allocation notice?
The notice of a Patronage Capital Allocation to the membership is posted in the member newsletter every year.
What do I have to do to start accumulating patronage capital?
Patronage capital is calculated by CREC for everyone who purchased electricity during a year in which the utility earned margins. No special action is required to start a patronage capital account. Your membership with CREC activates your patronage capital account.
How is patronage capital calculated?
The amount of patronage capital you earn in a given year is based on the amount of capital you contribute to the cooperative through payment of your monthly bills. The more electric service you buy, the greater your patronage capital account – although the percentage will remain the same. The sum of your monthly bills for a year is multiplied by a percentage to determine your patronage capital.
What percent of my bills is returned as patronage capital?
The percentage of your total payment that is allocated as patronage capital varies from year to year, depending upon the success of the cooperative. Patronage capital is only allocated for a year in which CREC earns margins. Since patronage capital is a member’s share of the margins, no credits are allocated for a year with no margins. For years in which CREC earned margins, and had a positive rate of return for your rate class, you will receive a patronage capital allocation.
Do I have to be a customer for a full year to earn patronage capital?
Yes.
Can I use the patronage capital I have allocated to pay my electric bill?
No. Allocated patronage capital may not be used to pay current bills. Your electric bill is due regardless of any patronage capital monies you may be entitled to receive in the future.
Will I receive a patronage capital check or credit on my bill every year?
Not necessarily. The board of trustees must authorize a retirement before you receive a check. When considering a retirement, the board analyzes the financial health of the cooperative and will not authorize a retirement that will adversely affect the financial integrity of the cooperative.
What happens to the patronage capital of a member who dies?
The patronage capital of a deceased member may be paid without waiting for a general retirement. However, these estate payments are not automatic and must be requested by a heir or representative of the estate. Forms may be obtained at CREC’s headquarters or requested by phone.
What happens to my patronage capital when I leave the CREC service area?
Your patronage capital remains on the books in your name and member number until they are retired. Please make sure the cooperative always has your current mailing address.
Can I donate my patronage capital general retirement to the CREC Foundation?
Yes, contact CREC for the appropriate form.