North Arkansas Electric Cooperative follows seven cooperative principles. The third of which is “Members’ Economic Participation”, which is exemplified through the assignment of patronage capital. Each year the cooperative makes a decision on the retirement of patronage based on the financial condition of the cooperative and the amount of assigned capital from the year in question.
This December’s disbursement of capital credit checks will make the twenty second consecutive year that North Arkansas Electric Cooperative will refund capital credits to its members. With this year’s total refund at approximately $674,867, North Arkansas Electric will have refunded $20,778,318 since inception.
Earlier in the year we had announced in the Messenger that 2009 would be the first year in quite some time that we would not be retiring patronage, due to the magnitude of the ice storm and it’s financial impact on NAEC. After assessing our financial situation, the Board of Directors of North Arkansas Electric Cooperative has determined that the financial condition of the cooperative DOES allow for a capital credit retirement this year. Our projected year end margins and equity are more than we had anticipated coming out of the ice storm, mainly due to budget adjustments instituted by NAEC management.
Capital credits are the most important distinction between a cooperative and any other form of business because they represent the member’s financial stake in the business. Also known as patronage, capital credits represent money left over from years the co-op took in more than it spent. This excess money is retained by the cooperative to use as operating capital for a period of time and then returned to the members based on their electrical usage.
The bylaws of North Arkansas Electric provide for a determination by the board of directors as to cash retirements of these capital credits and are based a great deal on the cooperative’s overall financial stability. Presently, our policy allows us to refund capital credits on at least a twenty-year cycle, using first-in, first-out methodology. This year’s cash retirement will be from excess capital generated in the operating year of 1991. Those members who received a capital credit assignment from 1991 should receive a portion of those funds in the form of cash.
Anyone who is no longer a member of NAEC is still entitled to their portion of capital credits from the years they were members. NAEC should be kept informed of current addresses of former members so that retirements can be properly mailed.
If you have questions or would like more information regarding capital credits, please contact North Arkansas Electric Cooperative.
Copyright 2010, North Arkansas Electric Ash Flat - Salem - Mountain Home , (870) 895-3221
