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Wednesday 23 Jul 2014
DMEA accelerates capital credit retirement
Monday, 13 September 2010 10:09

DMEA accelerates capital credit retirement

DMEA members who had service in any or all years from 2006-2009 will benefit from an upcoming accelerated capital credit retirement scheduled for November. $750,000 in capital credits will be returned or "retired" to this group of members as a whole. Most of these members will see a credit on their November electric bill for their own specific capital credit retirement.

DMEA accelerates capital credit retirement

DMEA members who had service in any or all years from 2006-2009 will benefit from an upcoming accelerated capital credit retirement scheduled for November. $750,000 in capital credits will be returned or "retired" to this group of members as a whole. Most of these members will see a credit on their November electric bill for their own specific capital credit retirement.

The November capital credit retirement will be the first time that DMEA’s board has used a "discounted" capital credit policy approved by the co-op’s membership in 2007. This vote authorized the board to return member equity more quickly by using the time value of money. Normally capital credits are returned in a twenty year timeframe. Members who prefer to wait approximately 20 years for their capital credits to be returned will have that option. Details will be explained in a letter DMEA is sending out to all its members later in September.

 "We expect most eligible members will be glad to see a credit on their November bill," said Dan McClendon, DMEA’s general manager. "This retirement will also be a small economic stimulus to our local economy."

DMEA joins a growing number of co-ops in Colorado and across the country that have used time discounting in recent years to greatly accelerate the timetable in which capital credits are paid out to members.

 What are capital credits?

 Non-profit cooperatives like DMEA do not earn profits as do investor-owned utilities. If a cooperative’s revenues exceed its expenses at the end ofthe calendar year, these funds called "margins" are allocated to members belonging to the co-op in that year in proportion to their purchase of electricity.

These allocations are referred to as capital credits. Before credits are returned to members they are utilized in needed projects, such as the construction of new substations and distribution lines, to help improve and maintain the co-op's infrastructure.

What’s an "accelerated" capital credit retirement?

DMEA has typically returned these funds through "retirements" after approximately 20 years, predicated on the cooperative's financial health. This means that under the typical retirement schedule, if a member received a $10 allocation in 2009 it would normally be returned in 2029. In addition to benefiting members, the time discounting policy also directly benefits the co-op’s finances and equity.

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