Board returns more capital credits to help members during pandemic

Board returns more capital credits to help members during pandemic

Published: May 15, 2020

For many Rock Energy Cooperative members facing financial hardship during this pandemic crisis, the credit on their May statement from the distribution of capital credits couldn’t have come at a better time.

In April, the board of directors voted to distribute about $2.1 million in capital credits. Since it was founded 84 years ago, the co-op has paid back more than $20 million to past and current members.

Shane L. Larson
More Power to You
Shane L. Larson,
Chief Executive Officer
Capital credits graphic

If you compare this year’s May statement with last year’s, you’ll notice that the amount of returned capital credits most likely has increased. The board recognized that many members were confronting financial difficulties and wanted to help them through this unprecedented time.

Since 2002, the board has returned 3 percent of members’ accumulated capital credits each year. That amount was increased to 5 percent this year, resulting in $830,000 more being returned to members. The board hopes that the extra amount will provide some financial help to members during the pandemic.

Your May statement shows your share of the co-op’s 2019 earnings as well as your overall capital credits balance, which represents your equity in the co-op. That money is used to maintain and upgrade the system and repay associated indebtedness.

Capital credits are a unique benefit of your Rock Energy membership. As a not-for-profit business, we function differently from an investor-owned utility, which must make a profit for shareholders who might not live in the community or receive service from the utility. Co-ops, however, support our communities by putting money back into the local economy and into the pockets of those we serve.

You might wonder why a not-for-profit business needs to accumulate equity. It’s actually a fairly simple explanation. We receive funds to provide electricity and natural gas to members from two sources. The first is the amount you pay for service, and the second is money that we borrow from banks. 

Our lenders require that we maintain a minimum equity level. We would put our financial position at risk if we did not retain enough of your capital credits to help build, sustain, and grow the co-op. Because we are financially strong, our lenders can offer lower interest rates since they have more confidence that we will repay our loans. That helps keep our energy rates lower.

If you want to learn more about capital credits, I encourage you to read these frequently asked questions. If you have any other questions, feel free to call us.