Capital credits are necessary in order to fulfill the third Cooperative Principle, Members' Economic Participation, in which each member contributes to the capital of the cooperative and allocates surpluses democratically.
As a cooperative, BEC is operated partially on cash received from members’ monthly payments and on the retention of capital credits. Operating on a portion of our net margins (distributed as capital credits), allows BEC to continue operations without the need to increase revenue, either by increasing our debt or increasing our rates. Both options would be more expensive for our member-owners than the present system. Effective management and balancing of these funds have made Bandera Electric a successful cooperative.