Capital Credits

***Update: At the December meeting, Medina EC's Board of Directors decided to retire $1 million in capital credits. Those members receiving a retirement, will see a "Capital Credit Retirement" line on an upcoming Medina EC electric bill that will show the total amount of the capital credit being paid.

Because Medina EC is a not-for-profit organization, it does not earn profits. Instead, any revenue above the cost of doing business is considered "margins." These margins represent an interest-free loan of operating capital by the membership to the cooperative. This capital allows Medina EC to finance operating costs and expenses, with the intent that excess capital will be repaid to the members in later years.

Q: What are Capital Credits?
A: Capital credits represent a member's share of the cooperative's margins during the time they have a membership. No special action is required to start a capital credit account. The membership with Medina EC activates the automatic calculation of the credit.

Q: How are capital credits calculated?
A: The amount of capital credits earned by any given member in a given year is based on the amount of the member’s monthly electric bills.

Q: What percentage of the electric bill is allocated to a member as a capital credit?
A: The amount of the capital credit depends on the amount of the member's monthly bill, minus the total cost of power required to deliver the power and energy to the member during that time frame. It also depends on the success of the cooperative. The Board of Directors reviews the cooperative's financial stability annually and decides when to retire a year's capital credits.

Q: What is the difference between "allocated" and "retired" capital credits?
A: Allocated capital credits appear as an entry on the permanent financial records of the cooperative and reflect a member's equity in Medina EC.

When the Board of Director's votes and approves to retire capital credits, monies are distributed back to the membership who were members during the time frame being retired.

Q: How are the monies distributed?
A: Members who were receiving electricity during the time period that is being retired and are currently still receiving electricity from Medina EC received a credit on their electric bill. The electric bill includes a line for "Capital Credit Retirement" which shows the total amount of the capital credit being paid. This amount is deducted automatically from the total balance due on the bill.

Former members that received electricity from Medina EC during the time period being retired will be mailed checks if the amount is more than $5. Inactive account distributions of less than $5 will rollover to future years and a check will be issued when the minimum amount is reached.

Q: What happens to a member's capital credits when they move away?
A: A member who terminates service no longer receives capital credit allocations. The balance in the member's capital credit account is maintained until the cooperative begins retirements that affect that account. Payments are often made around 20 years after they are earned, so it is important that members make sure Medina EC always has a current mailing address.