Trustees vote to pay out over $2.4 million in capital credits
Unlike investor-owned utility companies that strive to generate profits for shareholders, electric cooperatives like NFEC operate on an at-cost basis. Any dollars left over after expenses – referred to as margins – are returned to the consumer-members. Capital credits represent these dividends.
Capital credits are calculated each year in which NFEC makes a margin and allocated to each member in proportion to his/her total patronage for that year. NFEC retains and uses capital credits for operating capital until the financial condition of the cooperative (as determined by its bankers, RUS and NRUCFC, and the board of trustees), permits the co-op to issue a refund.
Because NFEC operates on a very tight budget to keep rates as low as possible, there is normally very little cash available year-to-year to pay, or retire, a significant amount of these accumulated credits.
This year, due to very unusual circumstances, NFEC had an unanticipated but welcome amount of cash become available. The board of trustees felt it was important to take advantage of this rare opportunity and put this cash back into the hands of our members by retiring twenty (20) years of capital credits.
The amount of the return to the members totals $2,415,788 and represents 100% of the capital credits allocated to NFEC members from 1966-1985. The refund amounts are based on a pro-rated amount of patronage paid by each member during those years.
“NFEC had the cash available to make this historic retirement for our members due to a series of events either directly or indirectly affected by Covid-19,” said Lisa Dailey, NFEC’s Chief Operating Officer. “Reduced operating costs from restricted operations during the “safer at home” guidelines, significant savings from refinancing old, higher interest debt with current record-low interest rates, and consideration of other factors, all combined to produce enough unexpected cash to accomplish this for our members,” she added.
Capital credit checks were mailed during the first week of August.
Members with multiple accounts will receive one check that reflects the total accumulated capital credits from all their accounts. Former NFEC members will be sent a check for their refund. That is why it is so important for us to have your mailing address if you should move off of NFEC lines.
Anyone who is an heir to a deceased member’s estate needs to complete and submit a Certification of Entitlement form, as well as present a copy of the death certificate, and will or letters of testimony. The form can be found on our website at www.nfecoop.com on the Patronage Capital Credits page found under the About Us tab.
If you have any questions about your capital credits, please call our office at 580-928-3366 and speak with Tawny Keith or Jose Hernandez.