About Us
Capital Credits
As of July 27, 2009
WHAT ARE CAPITAL CREDITS?
The retained margins left over at the end of the year at a not for
profit electric cooperative. Capital credits are the most significant
source of equity for most cooperatives. Capital credits are somewhat
similar to the dividends that investor-owned utilities pay to their
shareholders. The difference is that the Cooperative’s "shareholders"
are also the people that it serves and the "dividends" (capital credits)
are distributed to those member/consumers. Capital credits reflect each
member’s ownership in the cooperative. It is also called patronage
capital or equity capital.
WHAT ARE CAPITAL CREDITS AND HOW ARE THEY PAID?
Member-owned, not-for-profit electric utilities like Flint set their
rates to bring in enough money to pay operating costs, make payments on
any loans and provide an emergency reserve. At the end of each calendar
year, we subtract operating expenses from the total amount of money
collected during the year and this balance is the called "margin."
HOW ARE YEAR-END MARGINS ALLOCATED?
These margins are allocated to member-consumers as capital credits
based on their purchases from the cooperative. Member purchases may also
be called patronage.
WHY DOES A COOPERATIVE REFUND SOME CAPITAL CREDITS?
It is one of the seven Cooperative Principles: Member Economic
Participation. That principle states: Members allocate surpluses for any
or all of the following purposes: developing the cooperative, possibly
by setting up reserves, part of which at least would be indivisible;
benefiting members in proportion to their transactions with the
cooperative; and supporting other activities approved by the membership.
DOES GEORGIA POWER OR FORT VALLEY UTILITIES REFUND CAPITAL CREDITS?
No, capital credits only exist at not for profit electric utilities owned by their members.
WHEN DID FLINT ENERGIES LAST REFUND CAPITAL CREDITS?
2009.
WHY HAS IT BEEN SO LONG SINCE CAPITAL CREDITS WERE REFUNDED?
Each year, the board of directors makes a decision on whether to
refund capital credits based on the financial health of the cooperative.
High growth in the number of new electric services over the past
several years have kept member equity low, causing the board to defer
any capital credits refunds. For this reason, Flint’s ability to return
margins to members in the form of Capital Credit checks each year
reflects the Cooperative’s strength and financial stability.
DID I LOSE MY CAPITAL CREDITS IN THE YEARS THAT FLINT DECIDED NOT TO MAKE REFUNDS?
No, all capital credits from every year members have been served by
Flint are maintained until such time as the Board refunds them.
WHAT YEARS WILL FLINT REFUND IN SEPTEMBER 2009?
Flint will be refunding all of the remaining capital credits to
members who purchased electricity from the cooperative in 1981 and
one-half of the capital credits from 1982.
HOW MUCH WILL BE REFUNDED IN TOTAL IN 2009?
Almost $2 million.
I DID NOT GET ELECTRIC SERVICE FROM FLINT IN 1981 AND 1982. WILL I GET ANY REFUND?
No. This year, capital credits will only be made to members from 1981 and 1982.
HOW MUCH HAS FLINT PAID IN TOTAL CAPITAL CREDITS REFUNDS SINCE IT BEGAN IN 1937?
Flint has paid out $xx.x million in Capital Credit checks to current and former members to date.
HOW OFTEN DO MEMBERS RECEIVE CAPITAL CREDITS?
The Flint Energies board of directors makes a decision each year by
August whether or not to refund capital credits. When the cooperative is
strong enough financially and the member equity level is high enough,
the Board directs the staff to refund some portion of past year’s
capital credits.
HOW WILL THE REFUND WORK THIS YEAR?
Inactive members who no longer purchase electricity from Flint
Energies (with capital credits due) will receive a check after Sept. 15.
Due to the expense involved in processing printed checks, the minimum
check that will be written to current members (with capital credits due)
will be $100. Active members who are getting less than $100 will see
the refund as a separate line item on their September electric bill.
WHAT IF I HAVE MOVED?
If you move or no longer have electric service with Flint, it is
important that members keep their address current, so that future
disbursements can be properly mailed. Capital credits are reserved for
members even if they move out of the Flint service area. Flint will make
a diligent effort to send a check by mail.
WHAT IS A MEMBER?
Any individual or entity that is uses electricity from Flint
Energies. They are entitled to participate in cooperative elections and
vote and to share in patronage capital allocations.
WHAT DOES IT MEAN TO ALLOCATE CAPITAL CREDITS?
To assign capital credits to members/patrons after the books are closed on a one-year operation of the cooperative.
WHAT DOES IT MEAN TO RETIRE CAPITAL CREDITS?
To pay capital credits to members either through cash or credit. It’s
also called revolving, rotating or redeeming capital credits.
WHAT IS A ROTATION PERIOD?
The period of time that capital credits are held by the cooperative
before being returned to members. For example, in 2009 Flint is retiring
capital credits using the first-in, first-out (FIFO) method and a
27-year rotation period. (Returns capital credits allocated in 1982 in
2009.
HOW MANY PEOPLE WILL GET REFUNDS FROM FLINT IN 2009?
Roughly 11,000 currently active members will receive a bill credit on
their primary electric account in September for the amount of their
capital credit. Another 1,000 active members whose refund exceeds $100
will receive a check from Flint sometime after Sept. 15. About 12,000
inactive members will also get checks.
HOW HAVE MY CAPITAL CREDITS BEEN USED BY FLINT?
Prior to refunding capital credits, Flint uses member equity in place
of commercial loans to help construct the Cooperative's physical plant
(poles, wires, transformers, etc.).