It Pays to be a Co-op Member!

It Pays to be a Co-op Member!

As a Rock Energy member, you have equity in the co-op and financially benefit when revenue exceeds expenses in any given year. This year Rock Energy is distributing about $1 million in capital credits to current members on their May statements and about $200,000 to past members. Through the years, the co-op has paid back more than $18 million to past and current members.

Shane L. Larson
More Power to You
Shane L. Larson,
Chief Executive Officer
How do capital credits work? graphic

The cooperative’s annual profit, which becomes capital credits, is divided up according to each member’s financial participation with the cooperative.  So, if your annual energy bill is different from your neighbors, your capital credits for the year will also be different; it’s all relative.

Your May statement shows your share of the co-op’s 2018 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.

In accordance with our bylaws, the co-op’s directors decide each year whether to retire capital credits based on the financial health of the cooperative. At its April meeting, the board voted to retire a percentage of capital credits, which showed up as a credit on statements of eligible members.

Many longtime Rock members are familiar with the concept of getting money back from the co-op. Until 10 years ago, members would receive a check for their capital credits retirement at our Member Appreciation Day in the fall. The checks were a visible reminder of the cooperative difference. Now, we return capital credits to members on their May statements to avoid the cost of issuing checks.

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.

The retirement of capital credits is one of the most important things we do as a co-op. Unfortunately, many members don’t notice the credit on their statements. Surveys we’ve taken over the years show that just over half of respondents recall ever receiving capital credits. So please take a minute now to review your May statement and see how much of a credit you received. You can easily view your account by logging into SmartHub on our website, www.rock.coop. If you need help with that, just give us a call.

I hope you have a better understanding of co-op finances and capital credits after reading this column. For more information, I encourage you to read these frequently asked questions.

As always, I want to thank you for allowing us to be your energy provider. If we can do anything to improve our service, please let us know.

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