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$3 Million in Capital Credits on September Bills

 $3 Million in Capital Credits on September Bills

Sam Houston Electric Cooperative is continuing its long-standing practice of paying capital credits to its member-owners. In September, members’ electric bills will be lowered with their portion of $3 million in capital credits.

Over the years, Sam Houston EC has paid more than $42 million in capital credits to its members.

“Capital credits are another benefit of being a member of an electric cooperative,” said Kyle J. Kuntz, Sam Houston Electric Cooperative Chief Executive Officer. “Since the Cooperative is not-for-profit, we assign surplus revenues to each member based on the amount of electricity they purchased. This is called a capital credit.”

Capital credit dollars are then used to build, upgrade, and operate the Co-op’s power distribution system. That means each member owns a part of the lines, poles and substations that deliver electricity to their homes and businesses. This cornerstone of the cooperative business model allows Sam Houston EC to provide members with safe, reliable and cost-effective electricity.

After each fiscal year, and once the determination has been made that the financial condition of the Cooperative is stable and adequate to meet operating costs and debt covenants, the Board of Directors may elect to return excess capital by retiring capital credits to the Co-op members.

Capital credits are allocated based on the dollar value of individual electric use. So, the amount of the credit is directly proportionate to the amount of electricity purchased by a Sam Houston EC member. An allocation is the amount set aside into a separate account to be used as operating capital over a given period of time.

Capital credits retirement is the amount each member will receive back as a capital credit payment. This amount is a percentage of a member’s total capital credits balance. The amount to retire is decided upon annually by the Board of Directors, based on the financial condition of the Cooperative.

“Unlike investor-owned utilities that operate for profit and pay out dividends to shareholders, Sam Houston EC returns unused capital to our member-owners who actually purchase the electricity,” Kuntz said. “We work hard to find the best deals on electricity and operate as efficiently as possible in order save our members money. That’s what being a not-for-profit cooperative is all about.”

Capital credits help Sam Houston EC remain in a good financial standing. This capital is used for improvements, such as substations, power lines and other electrical system facilities that serve our members.

Learn More about Capital Credits