Earning capital credits is unique to the cooperative business model. Because Todd-Wadena Electric Cooperative is a not-for-profit utility, all margins (defined as revenues minus expenses) are allocated back to member-owners in the form of capital credits.
What is Allocation of Capital Credits?
An allocation is made annually for each member based on the amount of electricity purchased. The allocation is the member’s share of the net margins. The co-op sets this money aside to be used as operating capital for improvements and maintenance over a period of years.
What is Retirement of Capital Credits?
A retirement is the amount a member receives back as a refund. It is a portion of the total allocation. When capital is no longer needed for operating expenses, it is retired. The amount paid is decided annually by the board of directors based on the financial conditions of the cooperative, and is subject to our lending institutions’ regulations. TWEC typically pays their capital credits retirement in December each year.
What Happens to Unclaimed Capital Credits?
After a period of seven years, Minnesota law allows cooperatives to use unclaimed capital credits for charitable or educational purposes.
TWEC offers scholarships graduating high school students, and to adults who are heading to college for the first time, returning to complete an interrupted education, or working to improve their career opportunities. In 2020, six scholarships were awarded to high school graduates, and two scholarships were awarded to adult students.