Nodak Electric’s board of directors recently granted approval to retire $2 million of capital credits, which were applied as a credit to the active members’ May power bill. Members who received electric service from Nodak Electric in 2002-2003 but no longer have active accounts were sent a check to the last known address.
In addition to the retirement of capital credits, an allocation for the 2020 margins was made in the amount of $2.9 million. Any remaining profits or “margins” collected after expenses are returned to our member-owners. The distribution of those margins is based upon the patronage for the previous year – the amount spent with Nodak Electric for the member’s electric service. Those allocations represent equity or ownership of the cooperative and just like the retirement that just occurred for the years 2002-2003, those 2020 margins will also be retired later.
The capital credit retirement of $2 million is the third consecutive year of retirements of that magnitude. Over the course of our history, over $50 million in capital credits has been returned to our membership. Ownership of your cooperative has benefits!
Capital Credits 101
Nodak Electric is collectively owned by its members. Our mission is to provide electric power at the cost of service. Any remaining margins are returned to our member-owners and that ownership is called equity with the cooperative. Nodak Electric uses that member equity to offset the cost of debt for construction and maintenance-saving interest expense that would otherwise be factored into the cost to provide electric service to our members through their electric rates. It is a continuous cycle of the member building equity with Nodak and then eventually being paid for usage of that equity.