Agricultural Economics Department


Date of this Version



Royer, Jeffrey S. 2016. "Assessing the Ability of Rural Electric Cooperatives to Retire Capital Credits," Journal of Cooperatives 31: 32-50.


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This paper assesses the ability of rural electric cooperatives to retire member equity under three strategies: (1) replacing equity with term debt to provide for an immediate one-time retirement of capital credits, (2) reducing the rate at which equity is accumulated and relying more on term debt to finance asset growth so margins can be used to accelerate the retirement of capital credits, and (3) adjusting the electric rate to generate additional margins for retiring capital credits. Analyses suggest that the average distribution cooperative could employ these strategies to expand capital credits retirement substantially without weakening its financial condition.