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Capital Credits

BSU is a member-owned, not-for-profit cooperative. Customers, who are our members, are eligible to earn capital credits.

Each year, any revenue remaining after expenses, debt service, system renewal and replacement and other capital improvement funding, as well as accounting for depreciation and reserves, is allocated to members as capital credits. A member’s capital credit is calculated based on their service payments for the year in proportion to all member service payments for the year.

In some years, there are no capital credits to allocate to members. In those years, annual revenue has been fully committed to utility operations.

Current members receive a letter each year notifying them of their capital credit allocation. Capital credit retirement payments may be less than the amount in your capital credit letters.  Prior to 2015, capital credit letters included contributions to capital such as Aid to New Construction (capacity) Fees and pipelines built in new developments. These are not excess revenue and are not subject to capital credit retirement. 

The Board of Directors determines when to retire capital credits on a year-to-year basis. That decision is based on the financial condition and needs of the utility. Capital credits are retired in chronological order, according to Company Bylaws. Current members receive a credit on their utility bill and former members are mailed a check.

 

Allocation

At the end of the year, Company revenue may exceed expenses. This excess revenue is called the net margin and is allocated to members as capital credits. The allocation is based on a member’s service payments for that year as a percentage of all utility revenue.

Retirement

Retirement is the process of paying out capital credits to members.