So What is a Capital Credit?

You may often hear the term “capital credits” at Plumas-Sierra Rural Electric Cooperative (PSREC), but what are they?

Capital credits are a feature that make Plumas-Sierra different from investor-owned utilities. As a member-owned co-op, PSREC does not earn profits.

While all utilities must collect revenue to cover expenses and plan for future investments, investor-owned utilities design rates to maximize profits, allowing them to pay dividends to stockholders.

PSREC sets rates to cover costs, plan for growth, maintain good financial parameters and provide stability.

When revenues exceed the cost of doing business, the co-op earns net margins, which are allocated to active members in a ratio proportionate to the amount of electricity the member purchased during the year the net margins were earned. Those are called capital credits.

Capital Credit Process

  1. When you or your business establish service with PSREC, you become a member.
  2. PSREC tracks how much energy you purchase from the co-op.
  3. In years that PSREC earns positive margins, you are allocated your portion of the previous years margins based on the amount of service used
  4. PSREC tracks the allocation in your account as you invest in the co-op.
  5. Over time, your investment is used to fund capital needs such as construction, purchasing equipment, trucks, and inventory.
  6. Yearly, PSREC Board of Directors evaluates the financial conditions of the co-op to determine if capital credits can be retired or refunded.
  7. Your investment in Plumas-Sierra is returned!