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Monday 22 Dec 2014
What are Capital Credits? Print E-mail

 

CAPITAL CREDITS

A Valuable Benefit for Members of Electric Cooperatives

 

What Are Capital Credits?

Capital credits reflect each member’s ownership in the cooperative.  Electric cooperatives like DMEA do not earn profits in the sense that investor-owned utilities earn profits for their investors.  Instead, any margins or revenues related to the sale of electric service remaining after all expenses have been paid are returned to the cooperative’s members in proportion to their electrical usage.

 

How Are Capital Credits Returned to You, The Member?

“Retiring” i.e., paying back or returning capital credits is a two-step process:

 

Step 1: Allocation

An allocation determines your share of the cooperative’s margin in a particular year.  Margins are “allocated” or assigned to members who belong to the cooperative during the year in which a margin is generated.  The allocation is based on the member’s proportion of electrical usage for that year.  Each member’s portion is referred to as a “capital credit allocation.”

 

Step 2: Retirement

Once capital credits are allocated they are retained by the coop for up to 25 years, which is the rotation period.  They are retained because capital credits are the most significant source of equity for the cooperative.  Equity is used to help meet the expenses of the coop, such as paying for new equipment to serve members and repaying debt.  Capital credits help keep rates at an affordable level by reducing the amount of funds that must be borrowed to grow and maintain DMEA’s existing electric system. 

 

Upon completion of the rotation period, the board of directors will review the cooperative’s financial health and can declare a retirement (your cash back payment), whereby a portion of your capital credits are returned to you. 

 

For example, the cooperative using the first-in, first-out (FIFO) method and a 20-year rotation period would return capital credits allocated in 1987 in 2007.

 

Since the inception of cooperative electric service in our service territory, over $21 million in capital credits have been returned to coop members, energizing our local economy.

 

 What Does DMEA Do With Unclaimed Capital Credits?

DMEA seeks out the former member-owners who are due capital credits, even if they are no longer on our system.  Approximately once a year, DMEA will post the names of the member-owners who have unclaimed capital credits in local papers.  If the member-owner does not claim them and the capital credits remain unclaimed for 5 ½ years or more, then they are transferred to a fund for charitable and educational purposes.  These include scholarships, sponsoring the Youth Tour to Washington D.C., and donations to Energy Outreach Colorado, an organization that helps people who are struggling with their energy bills.

 

What Happens To My Family Member’s Capital Credits If They Have Passed Away?

DMEA’s board of directors will allow the capital credits to be “retired early” or paid back to the legal representative(s) of your family member’s estate.  In order to claim them, an affidavit is required to be completed, notarized, and returned in addition to a copy of the death certificate and personal representative appointment documentation if one was appointed. Please click here to download affidavit.

 

Capital credits that are claimed early due to the death of a family member are returned at the real time value as if the capital credits were paid back after their normal rotation period.

 

Other Capital Credit Questions?

If you have other capital credit questions, please call 1-877-687-3632 (OUR-DMEA) x391 or send an email to This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

 

DMEA’s Mission: “We Energize and Serve Our Communities”
DMEA and the more than 900 electric cooperatives across America are non-profit and consumer focused. We work to understand the needs of our members and bring a better quality of life to the people and communities we serve. We deliver high-quality, reliable electric power with accountability, integrity, innovation, and commitment to community.


Last Updated on Wednesday, 10 September 2014 15:33