About Capital Credits
What are capital credits?
Capital credits are one of the unique features of an electric cooperative. They represent our members’ ownership in the cooperative.
Much like the retained earnings of other types of organizations, capital credits serve to build equity and maintain cash reserves. NLI needs certain levels of equity to satisfy the requirements of our mortgage holder. Reserves are necessary to pay for emergency expenses. This helps to keep our rates stable.
How are capital credits distributed?
Annually, after the books have been closed and audited, each member’s amount of capital credits is calculated based on the revenue provided by that member. Members are then notified of the amount of capital credits that have been allocated to them that year. The NLI Board of Directors then reviews the financial position of the cooperative and determines how much, if any, capital credits will be refunded to the members in cash. The board considers the level of cash reserves, future needs for cash and the equity level of the cooperative.
In 2017 the NLI Board of Directors authorized retirement of capital credits. A link to a list of members that could not be located is listed below. If you are on this list, please contact us to update your mailing information and receive your Capital Credits.
The Board also annually sets a budget for the retirement of capital credits to estates and members over the age of 80. Links to forms to apply for early retirement are listed below.
Donate your capital credits
The Board of Directors of Northern Lights formed the Northern Lights Community Trust in late 2009. The trust will be managed by a board of seven Northern Lights members with the purpose of providing funds for non profit groups and members in the Northern Lights service territory.
Funds will be generated through the Helping Hands program, Operation Roundup, and donations of retired capital credits. In order for the donations to be considered tax deductible, the Northern Lights Board has directed the NLI staff to pursue tax exempt status with the IRS.