Kaua‘i Island Utility Cooperative (KIUC) will begin issuing $1.1 million in 2020 patronage capital retirement bill credits to cooperative members in May, due to action taken by the Board of Directors at its April 29, 2021 meeting. The Board has accelerated the timing of its retirement process this year in light of the COVID-19 situation and the financial challenges some of our members are facing.
Patronage capital is money that the cooperative has left over after paying all of its expenses and meeting its lenders’ expectations for financial stability. At the end of the year, money is credited to each member’s patronage capital account according to the amount the member paid for electricity. This is the member’s equity in KIUC.
As additional member equity funds come in year after year, KIUC is able to return some of its accrued capital credits by issuing patronage capital retirements to members. KIUC’s elected Board of Directors and the bylaws determine how and when capital credits are returned to members.
Since becoming a cooperative in 2002, KIUC has built $126 million in equity and has returned over $42 million to its members, including nearly $35 million in patronage capital retirements.
The amount of each individual member’s retirement is based on energy usage. Most members will see their retirement amount as a credit on their monthly bill. Members with inactive accounts with a refund amount of $1 or more will receive a check. If the amount is less than $1, it will remain in the member’s patronage account until the cumulative amount reaches $1 or more, after which a check will be sent. A list of frequently asked questions (FAQs) is attached.
Margins are what are left over at the end of the year after KIUC has paid all expenses. Your share of any operating margins is credited to your patronage capital account. In other business organizations, this would be called profit.
Patronage capital, also known as capital credits, represents margins credited to members of KIUC and allocated according to the amount paid for energy used. At the end of the year, that money is credited to each member’s patronage capital account.
As a cooperative, we are here to provide a service, not make a profit. Any revenue collected that is not needed to cover the cost of providing service is set aside and divided among the members in proportion to their patronage (how much electricity they paid for during the year).
As with any other business, it is necessary to maintain a certain amount of equity capital to help the cooperative remain financially sound, thereby ensuring a stable, reliable electric provider for the benefit of the members we serve. Your Board of Directors determines annually the prudent balance between retained equity and patronage capital retirements. Also, we must meet any requirements placed by our lender.
No. Since KIUC is non-profit and member owned, you do not receive interest or dividends on your patronage capital account.
When the cooperative is in sound financial condition and when there are excess funds left over at the end of the year, the Board of Directors and the co-op’s lender have the authority to approve patronage capital credits to be retired or refunded to the membership. An exception is made when payments are made to estates of deceased members. In order to maintain financial stability and to be fair to all members, the estate retirement will be paid at the net present or discounted value. Or you can choose to receive the patronage capital credits at the future scheduled retirement dates with no reduction.
The patronage capital that has accumulated in your account will remain in your name. It is important that you keep KIUC informed of your current address so that you will receive your check when a general retirement of patronage capital is made.
The following items are included: non-fuel energy charge, fuel and purchase power energy charge, customer charge, minimum charge, resource cost charge, streetlight (SL) fixture charge, demand charge.
Please consult with your tax advisor for any potential tax implications.