Beginning December 1, Pedernales Electric Cooperative will retire more than $14 million in capital credits to current, eligible members in the form of a credit on their bills. Members are eligible for a retirement if they have a positive capital credits balance, have received a September 2010 PEC bill for electric use and are qualified to receive a December bill.
PEC’s Board of Directors voted in its October regular monthly meeting to retire more than $14 million and subsequently fulfill its obligations under the terms of a settlement agreement reached in 2008, which required PEC to distribute $23 million in capital credits by 2012 exclusively to current members. During the past two years, the Board has distributed about $8.7 million.
“There is a good business reason to pay out the remaining settlement balance. It was the last, final step for fulfilling the court agreement. We are pleased to be able to complete this obligation to the members,” PEC District 1 Director Cristi Clement said.
Because PEC is a cooperative, owned by its members, it doesn’t earn profits, but when revenues exceed expenses, the co-op does earn margins. In July, PEC allocated more than $56 million in margins to members in the form of capital credits. These capital credits reflect member ownership in PEC, and the Cooperative uses capital credits to fund operating activities and reduce borrowing, with the intent of later repaying that capital back to members. The December retirement is a portion of this year’s positive margin.
After reviewing the Cooperative’s finances each year, the Board of Directors determines whether a portion of capital credits can be retired to members. The Board also evaluates the method, basis, priority and timing of all capital credits retirements. Because capital credits are based on the amount of electricity a member uses, the retirement amount will vary from member to member and from year to year.
The Cooperative is currently finalizing a new capital credits policy, which will serve as a guide for future capital credits allocations and retirements.
To learn more about capital credits, visit www.pec.coop or call 1-888-554-4732.