Capital Credits

Cooperatives aren’t like for-profit companies that are owned by investors. As a member of New Hampshire Electric Cooperative (NHEC), you aren’t just a customer, you’re also a part-owner of your Co-op. This means, among other things, that you get to vote on who will represent you on the Co-op’s Board of Directors. And when the Co-op “earns a profit,” you are allocated a portion of that equity.

This equity is first used to fund capital projects to keep our distribution system safe and reliable, but it will be returned to our members as the Co-op’s finances allow. Members’ equity in NHEC is represented by Capital Credits.




What are capital credits?

Capital credits are NHEC members’ portion of equity in their Co-op. Co-op members are allocated capital credits when NHEC collects more money through its distribution rates than it spends each year. This difference would be considered profit in a traditional, for-profit business, and is also referred to as “margins.” These margins are first used to fund needed investments to NHEC’s distribution system and keep electric rates affordable, but will eventually be returned to the members who paid the rates.

When did NHEC begin returning capital credits to members?

Current and past members received their first capital credit payments in July 2021. Each year NHEC’s Board of Directors will review the Co-op’s finances to determine if NHEC is in a good position to return capital credits. The Board will vote to continue returning capital credits if it can be done without causing financial harm to the business.

How are capital credits allocated to members?

After the end of the year, if NHEC has a positive margin, capital credits are allocated to members based upon their share of the distribution revenue they paid to the Co-op. The more a member contributes to the distribution system in a year through rates, the larger their capital credit allocation is for that year.

How are members’ capital credits tracked?

When new members sign up for service with NHEC, two accounts are created in their name: a billing account and a capital credit account. The capital credit account is specific to you and your spouse, if married, and both names are on the account. Regardless of how many times you move, or how many billing accounts you may have with NHEC, you have one capital credit account that stays with you. At the end of each year, NHEC’s margins are allocated back to the members. Your share is tracked in your capital credit account for that year.

Why doesn’t NHEC lower rates instead of returning capital credits?

NHEC must return capital credits to the members who paid the rates that created them. If NHEC decreased rates instead of returning capital credits, past members would not receive the capital credits they were owed, which would not be equitable.