At our Cooperative, members are a part of something special. Our members collectively own Lake Region Electric and enjoy several benefits unique to cooperatives. Capital credits are fundamental to the cooperative business model and a financial benefit our members enjoy.
Because LREA is a not-for-profit cooperative, owned by its members, it doesn't technically earn profit. If revenues exceed expenses, or margins, those margins are assigned to you in proportion to the amount you are billed for electricity during the year. These "capital credits" reflect your ownership in LREA but are not automatically returned to you. The Cooperative uses capital credits to fund operating activities and reduce borrowing, with the intent of repaying this capital to you in later years.
After reviewing the Cooperative's finances each year, the board of directors determines wheter a portion of capital credits can be retired, or returned, to members. The board also evaluates the method, basis, priority and timing of all capital credit retirements. Because capital creidts are based on the dollar amount of electricity a member purchases, the retirement amount will vary from member to member from year to year.