North Star Electric Coop.

Capital Credits

Each spring we send members information about their capital credits earned the previous year and their accumulated capital credit balance.  Capital credits are the margins (or profits) left after the expenses are paid.  Because we are not-for-profit, all margins are allocated to the members based on how much electricity they buy.

 

Why should you care?

So what does this tidbit of information mean to you? Only that your power supplier, North Star Electric Cooperative, is owned by those it serves, is devoted to improving the lives of those it serves by providing electricity and other beneficial services, is committed to the community in which you live, is a not-for-profit organization bringing you electricity at-cost, and whose ONLY interest is you, the member. We report to YOU, and everyone is treated equally here. We do not report only to people who are financially fortunate enough to buy stock in a company. Those investors expect companies to make profits for them to line their own pockets, and the end-consumer gets no return.

 

What does not-for-profit mean?

All revenue collected in excess of expenses (the margin) is ultimately returned to you and the other members who purchase electricity from the Cooperative. Your accumulated capital credits represent your current ownership in the Cooperative. You and the other 5300 members own 43% of all of the Cooperative’s $35 million of assets (poles, transformers, wire, trucks, investments, etc.), and the other 57% represents what we have borrowed from others. To keep interest costs low, the Cooperative temporarily uses your capital instead of borrowing all funds for capital improvements.

 

When will I get paid?

Each fall the board of directors evaluates the financial position of the Cooperative and considers a payment of capital credits. Nearly $7,000,000 has been returned to members.

 

Is it taxable?

If you’re wondering about income tax issues and capital credits, the only time you have to claim capital credits as income is when the check that you receive (not the allocation) includes charges that you claimed as tax deductible for your business or farm. For example, if you claimed 50% of your electric bill as a tax deduction in the year(s) retired, then 50% of your refund is taxable. If you have any questions, please call us. Our capital credit expert is Robyn Sonstegard, and she can be reached in Baudette at 634-2202 (or toll free at 1-888-634-2202).

At your service we remain…..