Q & A Allocation vs Retirement
What is an allocation and a retirement?
Allocations are made annually for each member/owner based upon their percentage of total cooperative revenue.
A retirement (refund) is the amount you receive back as a Capital Credit refund. It is a percentage of your total capital credit balance. The percentage to retire is decided upon annually, based upon the financial needs of the cooperative.
When do you refund (or retire) Capital Credits?
When Prairie Energy Cooperative is in sound financial condition and when there are excess funds left over at the end of the year, the Board of Directors has the authority to approve a certain percentage of the capital credit funds to be retired (or refunded) to the membership.
How are my capital credit allocations used until I receive them?
Capital Credit allocations are pooled together and used as operating capital so that Prairie Energy Cooperative can serve our member/owners with reliable power. These funds help finance expensive power reliability improvements and maintenance such as replacing power lines.
If we funded that total amount of allocations, we would have to borrow that amount of money in order to continue operating. Having operating capital helps the cooperative minimize the amount of high-interest money it must borrow, which in turn helps lower member/owner’s cost by stabilizing rates.
Why can’t my Capital Credit allocations be refunded to me all at once?
Capital Credit funds are used for expensive reliability improvements and maintenance – and these are long term investments. Capital Credits cannot be refunded all at once because they help the cooperative remain financially sound, thereby ensuring a stable, reliable electric provider for the benefit of the member/owners we serve.
What happens to capital credits of a deceased member/owner?
If a member/owner passes away (for a joint membership, both must be deceased), the administrator of their estate must notify the cooperative in order to claim the member/owner’s Capital Credit balance.