Coastal Electric Cooperative announce last week it was mailing 7,404 checks totaling $638,336 to people who received electricity from the co-op in 1986 and 1987.
An additional 201 credits will be posted to accounts who are receiving a refund of less than $25.
To date, Coastal has retired $3.6 million in capital credits to members.
"Coastal Electric operates at cost — collecting enough revenue to run and expand the business but with no need to raise rates to generate profits for distant shareholders," Board President Steve Mullice of Liberty County said. "When Coastal Electric has money left over, it’s allocated back to our members as capital credits. When the co-op’s financial position permits, the co-op retires, or pays, the capital credits to members in cash or as a bill credit.
"Allocating and retiring excess revenue to members helps distinguish cooperatives," Mullice said. "We’re proud to support our communities by putting money back into the local economy — and into the pockets of those we serve. It makes our business model special."
The retirement of capital credits — so-called because members provide capital to the cooperative for it to operate and expand — depends on the co-op’s financial status. A Coastal news release said it holds onto allocated capital credits to cover emergencies and unexpected natural disasters like the recent Hurricane Matthew and to expand its electric system, all of which may require large-scale construction of poles and wires. This action decreases the need to raise rates or borrow money to pay for the infrastructure. After a number of years, if financial conditions permit, Coastal’s board of directors may decide to retire a set amount of capital credits.
Members are annually allocated capital credits based on the amount of electricity they consumed during a year.
"Margins earned from electric revenues are the only real source of equity for not-for-profit electric cooperatives," said Laura McGee of Richmond Hill, a recently retired CPA and now secretary-treasurer of the Coastal board of directors "When we need to borrow money to build and improve our power lines, our lenders look at our underlying financial strength and strong and consistent equity levels are one key aspect of financial strength. So it’s essential for Coastal Electric to maintain the right balance between retiring capital credits to members and retaining sufficient equity on its balance sheet.
"The co-op board tries to do a good job of striking that balance. That contributes to our ability to receive attractive rates on our construction loans, which in turn helps us keep costs low."