SUMMERDALE, Alabama — Baldwin EMC representatives announced recently that they have completed the distribution of $1.2 million in capital credits. The funds were distributed to those who were members of the cooperative in 1987, 1988 or 2010.

“Returning funds to customers is not a common practice among most utility companies,” said E.A. “Bucky” Jakins Jr., Baldwin EMC’s chief executive officer. “It’s a unique part of the cooperative business structure and one of the benefits of being a Baldwin EMC member.”

According to Jakins, some years, Baldwin EMC takes in more money than it costs to provide electricity to its members. Those leftover funds are called margins. Because Baldwin EMC is a not-for-profit electric cooperative owned by the people it serves, those margins belong to the members who paid for electricity and are documented in capital credit accounts.

However, before they can be refunded to members, Jakins said the margins serve an important purpose.

“These margins act as member equity in the cooperative. It is what our members invest back into Baldwin EMC,” he said. 

Member equity reduces the need to borrow money to run the business and helps hold down rates.

Every year, Baldwin EMC’s Board of Trustees reviews the economic condition of the cooperative. If the cooperative is financially stable, the Board may decide to refund some of the capital credits, or member equity.

“To put it simply, the Board might decide that we no longer need to hold on to a portion of those funds, so they can be given back to the members,” Jakins said.

He also added that it isn’t always possible to return capital credits to members. If the cooperative has a year with unforeseen expenses like storm damage, the margins must be used for operating capital to keep the co-op financially strong and maintain reliability.

“However, due to the co-op’s fiscal responsibility, BEMC has been able to return capital credits this year, something we always look forward to doing,” Jakins says.

Capital credit checks were mailed during the first two weeks of December. The amount refunded to each member was based on how much electricity that individual used during 1987, 1988 or 2010.