Capital credits are the return of your investment in the cooperative, but not everyone understands how they work. Below are a few common questions about capital credits.
What are capital credits?
An electric cooperative operates on an at-cost basis by annually “allocating” to each member, based upon the member’s purchase of electricity, operating revenue remaining at the end of the year. Later, as financial condition permits, these allocated amounts—capital credits—are retired. Capital credits represent the most significant source of equity for CCEC. Since a cooperative’s members are also the people the co-op serves, capital credits reflect each member’s ownership in, and contribution of capital to, the cooperative. This is unique to cooperatives and differs from dividends investor-owned utilities pay shareholders, who may or may not be customers of the utility.
Where does the money come from?
Member-owned, not-for-profit electric co-ops set rates to generate enough money to pay operating costs, make payments on any loans, and provide an emergency reserve. At the end of each year, we subtract operating expenses from the operating revenue collected during the year. The balance is called an operating “margin.”
How are margins allocated?
Margins are allocated to members as capital credits based on their purchases from the cooperative — how much revenue the member contributed. Member purchases may also be called patronage.
Are capital credits retired every year?
Each year, the CCEC Board of Directors makes a decision on whether to retire capital credits based on the financial health of the cooperative. CCEC’s current plan is to retire up to $1.5 million per year for the foreseeable future. However, during some years severe storms or other unexpected events may result in the need to spend additional funds to repair lines. Events like these might increase costs and decrease member equity, causing the board not to retire capital credits. For this reason, CCEC’s ability to retire capital credits reflects the cooperative’s strength and financial stability. The board alone decides whether to retire capital credits.
Do I lose my capital credits in the years the co-op decides not to make retirements?
No. All capital credits allocated for every year members have been served by CCEC are maintained until such time as the board retires them.
What years were most recently retired and how much was retired?
In the spring of 2017, CCEC retired a total of $1.4 million in capital credits to members who purchased electricity from the cooperative in 1992 and a portion of 1993.
How will the retirement work?
Inactive or former members who no longer purchase electricity from CCEC (but who purchased electricity during the years being retired) receive a check in the spring of the year capital credits are retired. Active members who purchased electricity during the years being retired receive their capital credits as a separate line item credit on their March electric bill.
What if I have moved?
If you move or no longer have electric service with CCEC, it is important that you inform the cooperative of your current address, so that future retirements can be properly mailed to you.
CCEC maintains a searchable database of capital credit listings that have gone unclaimed over the years, meaning we’ve sent checks that were returned or uncashed. Individuals and businesses are included in the database. We encourage you to search your name, your business name, or the names of family members.
Visit kwh.com/capital-credits to access the unclaimed capital credit database.
If you see your name on the list, call 1.800.2488.3292 to claim your credits. Credits must be claimed by the individual listed or their official representatives.