It pays to be a co-op member
Capital Credits
CCT members share in the profits through capital credits
What are co-ops?
Co-ops (cooperatives) are businesses owned by their members — the people who use the co-op’s products and services — and are driven by service rather than profit. Co-ops allow ordinary people to join together to gain economic power and improve their lives and communities. Another valuable benefit for cooperative members is capital credits.
What are capital credits?
Capital credits reflect each member’s ownership in the co-op. Cochrane Co-op Telephone (CCT) does not earn profits in the sense that investor-owned utilities earn profits for their investors. Instead, any margins or revenues related to the co-op remaining after all expenses have been paid are returned to the co-op’s members in proportion to the services they subscribe to.
How are capital credits returned to members?
This occurs through the two-step process of “retiring” — paying back or returning capital credits.
Step 1: Allocation
An allocation determines your share of the co-op’s margin in a particular year. Margins are “allocated” or assigned to members who have service with CCT during the year in which the margin is generated. The allocation is based on the member’s services they subscribe to for that year. Each member’s portion is referred to as a “capital credit allocation.”
Step 2: Retirement
Once capital credits are allocated, they are retained by CCT until the Board of Directors review the co-op’s financial health and can declare a “retirement” which is usually done once a year. Capital credits are retained because they are the most significant source of equity for CCT, which is used to help meet expenses such as investing in plant upgrades and new technology to better serve our members and repaying debt. Capital credits help keep rates at an affordable level by reducing the amount of funds that must be borrowed to grow and maintain CCT.