Manager’s Message – April 2021

Posted: April 1, 2021 at 4:38 pm

Halifax EMC is proud to continue to serve you and to be able to return a portion of your electric purchases to you. The good news is that the financial condition of your cooperative is strong and allows the payment of your capital credits for helping build, sustain and grow your local cooperative. In March, Halifax EMC returned $380,981 in capital credits for 1999 through 2001.
What exactly are capital credits?
An electric cooperative operates on an at-cost, not-for-profit, basis by annually “allocating” to each member, based upon the member’s purchase of electricity, operating revenue remaining at the end of the year. Later, as financial condition permits, these allocated amounts—capital credits—are retired. Capital credits represent the most significant source of equity for HEMC. Since a cooperative’s members are also the people the co-op serves, capital
credits reflect each member’s ownership in, and contribution of capital to, the cooperative. This differs from dividends investor-owned utilities pay shareholders, who may or may not be customers of the utility.
When will I receive my capital credit?
Typically, capital credits are issued 20 years after the year in which the margins were earned. The Board continually monitors the financial condition
of the cooperative and annually reviews past multiple years’ financial performance and future capital investment needs. If the financial needs of the cooperative are met, the Board will retire margins by paying capital credits to the members.
This year the Board determined that capital credits for members from 1999 through 2001 should be retired. Those members received either a bill credit up to $199 or a check in the mail if the credit was $200 or more, which reflects their contribution of capital to, and ownership of, Halifax EMC during those years. That may seem like a long time ago. However, those funds helped us maintain lower rates, reduced the amount of money we needed to borrow from outside lenders to build, maintain, and expand a reliable electric distribution system, and covered emergency expenses.
Do I earn interest?
Although the cooperative is using your money by reinvesting it in the business operations, you do not earn interest. Since Halifax EMC is a not-for-profit, member-owned company, you do not receive interest or dividends on your capital credits. To pay you interest, the cooperative would have to raise your electric rates to cover the cost of the interest.
I moved. Will I still receive capital credits?
If you move from the Halifax EMC area, the capital credits accumulated in your name will remain in your name, but will not affect when capital credits are paid.
Whenever capital credits are paid for a given year, they are paid to everyone who paid an electric bill that year regardless of whether they are currently a member or have moved. If you do move, it is important to keep Halifax EMC informed of your current address so you will receive your capital credit check when it is issued.
Members also have the option upon termination of an individual’s membership (non-commercial) to have all of their capital credits returned early; however, these capital credits will be reduced by the discount rate.