It’s time for CEC members to receive the credit they’ve earned—capital credits—for helping build, sustain, and grow your local electric cooperative. CEC members with active electric accounts will receive credit on their electric bill in May, based on previous purchases from the cooperative. Inactive members will receive a check in the mail at their last known address if the credit amount is $30 or more. Capital credits payable to deceased eligible members may be settled on a present-value basis to the legally appointed representative of the estate. Proper documentation is required to process these requests.
Here are answers to some of the most frequently asked questions related to capital credits.
What are capital credits?
Capital credits represent the margins—or excess revenues—earned by the cooperative and allocated to members based on their electric usage. These funds are retained by the cooperative for a period of time as working capital and are later returned to members when financial conditions permit. This is different from dividends paid by investor-owned utilities to shareholders, who may or may not be customers of the utility.
Where does the money come from?
As a member-owned, not-for-profit electric cooperative, CEC sets rates to cover operating expenses, loan obligations, and to maintain emergency reserves. At the end of each year, operating expenses are subtracted from operating revenue. Any remaining balance is referred to as an operating “margin.”
How are margins allocated?
Margins are allocated to members as capital credits based on their purchases from the cooperative—commonly referred to as patronage. Simply put, the more electricity a member uses, the greater their share of allocated capital credits.
Are capital credits retired every year?
Each year, CEC’s Board of Trustees determines whether capital credits can be retired based on the cooperative’s financial condition. Factors such as system growth, infrastructure investment, or severe storm restoration costs may affect this decision. When capital credits are retired, it reflects the cooperative’s overall financial strength and stability.
Do I lose my capital credits in years when no retirement is made?
No. All capital credits allocated to members remain on record until the Board of Trustees approves their retirement.
How are capital credits calculated and retired?
Capital credit retirements are calculated as a percentage of a member’s total accumulated capital credit balance. The amount retired each year is deducted from the oldest capital credits on record for that account. Before approving a retirement, the board of trustees carefully evaluates the cooperative’s financial condition and future capital needs. The retirement percentage is set at a level that ensures CEC remains financially sound while returning value to its member-owners. If you have questions about your capital credit, please free to contact our offices during regular business hours.