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Capital Credits FAQQ: What are capital credits? A: As a cooperative, Choptank Electric is here to provide a service, not to make a profit or margin. There is no stock to be purchased or sold; our members are the owners of the company. One of the cooperative principles is the allocation of any margins earned by the co-op to its members. Any revenue collected by the co-op that is not needed to cover the cost of providing service is accounted for and allocated back to the members based on the amount of electricity they paid for during the year. Q: What are margins? A: Margins are the funds left over at the end of the year after all bills are paid. In other businesses, this is called profit. Q: How do I know how much I have in capital credits? A: Each member is sent an allocation notice every year. This notice tells how much has been credited to your capital credit account. The notice will also indicate the portion of capital credits each member has been allocated from Old Dominion Electric Cooperative (ODEC), Choptank's power supplier. As a cooperative, ODEC gives capital credits to its members - Choptank is one - and Choptank in turn re-allocates these margins to the member's account. Q: Why don't I get a check every year? A: Each member has a separate account for tracking the allocations and eventual payment of capital credits, but this does not mean there is a bank account with money in it for each member. It does mean a portion of the equity of the co-op has been apportioned to the members who contributed it. The money is used to support operations and construction and to meet the financial requirements of Choptank's mortgage holder. Capital credits represent the member's ownership in the co-op. Q: Is interest paid on capital credits? A: No, it is not. If we paid interest on capital credits, the money to pay the interest would have to be collected from the membership. We have one primary source of revenue - the sale of electricity. Rates would have to be increased in order to pay interest on capital credits. Q: Why didn't I get all of the money shown on my statement? A: The co-op cannot pay back all of the capital credits at one time since our equity level must be maintained to meet our mortgage requirements. Remember that these dollars have been used to run the business. Q: How do you determine the amount to be returned? A: The Choptank Electric Board of Directors decides each year how much the co-op can afford to refund to its members. There are many items taken into consideration here, including the general financial well being of the cooperative, mortgage holder requirements and future capital needs. Q: Will I still get my capital credits if I move off co-op lines? A: Yes, but not until a refund is made to members who furnished capital at the same time you did. Facilities were built to serve you and leaving our service area does not alter your obligation to furnish capital for those facilities. It is important that you keep us informed of your current address so that you will receive your check when a refund is made. Q: What happens to the capital credits in my account if I die? A: The board of directors, at its discretion, has the power to pay out capital credits on a discounted basis owed to a deceased member if the legal representatives of the estate make such a request in writing.
Choptank Electric Cooperative, Inc., Route 404 & Route 328,
Denton, Maryland 21629 Toll Free: 877-892-0001
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