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Capital Credits
As a cooperative, Blue Ridge Energy doesn’t earn profits. Instead, revenues remaining after all expenses are paid each year are considered “margins.” Margins are allocated annually to members and reflect your member equity (ownership) in the cooperative. After being used for a period of years as capital to help finance reliability projects, these funds are
returned to members.
(Members qualifying for a refund of $100 or more receive a check and those qualifying for less see a credit applied to their electric account in May of each year. )
For many of you, the refund is a much-needed source of income. For others, you may be fortunate enough to consider donating all or a part of your refund to Operation Round Up® and your Blue Ridge Energy Members Foundation.
One more way
Blue Ridge Energy
is adding value
to your life!
Quick Answers:
What are capital credits?
Capital credits represent each member’s ownership of the cooperative. They are the margins credited (or allocated) to the members of the cooperative based on their purchases from the cooperative the previous year. These margins are used by the cooperative as capital to operate the business for a period of time. You may also see capital credits referred to as “patronage capital” or “equity capital.”
What's the difference between an allocation and a retirement?
Allocations are made annually for each member, based upon the amount of electricity purchased the previous year. An allocation is the amount set aside into a separate account to be used as operating capital for reliability improvements and maintenance over a period of years. Your allocation amount will be printed on your electric service bill, usually in July.
A retirement is the amount you receive back as a capital credits refund. It is a percentage of your total capital credits balance. The percentage to retire is decided upon annually, based upon the financial needs of the cooperative.
How are my capital credits allocations used until I receive them?
Capital credits allocations are pooled together and used as operating capital so that we can serve our members with reliable power. These funds pay for expensive power reliability improvements and maintenance such as replacing power lines or building substations. If we refunded the 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’s costs by stabilizing rates.
Why can't my capital credits allocations be refunded to me all at once?
Remember that 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 members we serve.
Can I use my capital credits allocation to pay on my bill?
No. Allocations are used as the operating capital of the cooperative. They are not available until a percentage is retired and refunded back to you as the Cooperative’s financial condition warrants and the Board approves.
Capital credits are used in three specific ways
1
Working Capital
These funds are invested in substations, power lines, poles and other infrastructure critical to the operation of an electric utility. Working capital is used to keep the cooperative financially sound and to provide highly reliable electric service.
2
Balancing Equity and Debt
These funds balance equity and debt requirements as investments are made in the electric system. The longer you are a member, the more equity you build in the cooperative. Since returns continue to be made over time, it’s important you let us know your new address if you move from our service area.
3
Capital Credit Refunds
Each year, your board decides on a capital credits retirement based on the financial health of the cooperative and may distribute a portion of the capital credits balance back to members. These funds are based on the total amount of capital credits available and takes into consideration necessary working capital. Since its inception, your cooperative has returned more than $92 million to its members in capital credits retirements