Capital Credits

  • What are capital credits?

    Capital credits represent the value of a member’s investment in Baldwin EMC; it is not dollars in a bank account. It is similar to the equity you build in your home. The amount of capital credits a member has is in direct proportion to the amount of electricity he or she purchases.

  • Where do capital credits come from?

    In every year in which Baldwin EMC takes in more money than it costs to provide electricity to its members, the remaining funds are called capital credits. Accurate records are maintained and capital credits are allocated to each member based on the amount of electricity they used during the year. Capital credits represent the investment that our members hold in the cooperative and reduce the need to borrow money to run the business. This helps to keep electric rates affordable.

  • When are capital credits returned to the members?

    Capital credits are returned as the cooperative can afford to do so. When capital credits are refunded, members will receive their share whether or not they are still a member. Deceased members’ capital credits are paid to their estate. That’s why it’s important for you to provide a forwarding address if you leave our service area so that you can still receive payment.

  • How often does Baldwin EMC refund capital credits?

    Each year, the board decides whether the financial condition of the cooperative allows for the refund of capital credits. More than $18.8 million have been paid out to our members in capital credits in just the past ten years. In comparison to electric cooperatives across the country, Baldwin EMC has returned a larger percentage of capital credits to our members than most other cooperatives.

  • Why does Baldwin EMC need to hold capital credits in reserve?

    Baldwin EMC must constantly build, repair and maintain power lines to keep the electricity running safely and smoothly to our members’ homes, and this takes a lot of money. Just like buying a home, financial institutions require us to have equity in the business to qualify for business loans. Capital credits represent our members’ equity in the business, reduce the amount of money we have to borrow and help to lower rates.

  • What allows Baldwin EMC to hold capital credits in reserve?

    Baldwin EMC was organized as a not-for-profit cooperative under Alabama law. The law states we can retain or retire capital credits in accordance with our bylaws. Our bylaws allow us to retain or refund capital credits based on the financial needs of the cooperative.

    Baldwin EMC refunds as large a percentage of capital credits as possible while continuing to operate the cooperative on sound financial principles. This allows the cooperative to keep its rates lower than they would be if capital credits were refunded in larger amounts.

  • What happens to capital credits when a member dies?

    Baldwin EMC will continue to pay capital credits to the estate. Upon written request, the Board of Trustees may authorize the refund of all remaining capital credits to the legal representatives of the estate in one payment, as long as the refund does not affect the financial stability of the cooperative. The documents needed to request a refund of capital credits from a deceased member’s account can be obtained by contacting Baldwin EMC at (251) 989-6247 or (800) 837-3374.