Capital Credits

WHAT ARE CAPITAL CREDITS?

WIN Energy REMC is an electric cooperative which operates on an at-cost basis by annually allocating operating revenue to each member at the end of the year based upon the member's purchase of electricity.  These allocated amounts called capital credits are retired in the future based upon the financial condition of the cooperative.  WIN Energy retires or pays capital credits on a 25-30 year cycle which means that margins allocated this year will be retired in approximately 25-30 years in the future.  Capital credits represent a significant source of equity for the cooperative.  Since a cooperative's members are also the people it serves, capital credits reflect each member's ownership in, and contribution of capital to, the cooperative.  This 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 cooperatives 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, or how much power the member used.  Member purchases may also be called patronage.

 

DO INVESTOR-OWNED UTILITIES OR MUNICIPALS RETIRE CAPITAL CREDITS?

No.  Within the electric industry, capital credits only exist at not-for-profit electric cooperatives owned by their members.

 

ARE CAPITAL CREDITS RETIRED EVERY YEAR?

Each year, the WIN Energy REMC Board of Directors makes a decision on whether to retire capital credits based on the financial health of the cooperative.  During some years, the co-op may experience high growth in the number of new accounts, or severe storms which may resulit in the need to spend additional funds to repair lines.  These and other events might increase costs and decrease member equity, causing the board not to retire capital credits.  For this reason, WIN Energy'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 YEARS THE COOPERATIVE DECIDES NOT TO MAKE RETIREMENTS?

No.  All capital credits allocated for every year members have been served by WIN Energy REMC are maintained until such time as the board retires them.

 

HOW OFTEN DO MEMBERS RECEIVE CAPITAL CREDIT RETIREMENTS?

The WIN Energy REMC Board of Directors makes a decision each year whether or not to retire capital credits.  When the cooperative is strong enough financially and member equity levels high enough, the board directs staff to retire some portion of past years' capital credits.

 

HOW WILL THE RETIREMENT WORK?

Once the board approves the retirement of capital credits, members having electric service during those retirement years will receive a check for the amount of the approved retirement.  Capital credit checks are mailed in December each year retirement is approved.

 

WHAT IF I HAVE MOVED?

If you have moved or no longer have electric service with WIN Energy REMC, it is important that you inform the cooperative of your current address, so that future retirements can be properly mailed to you.  If you purchased electricity during the years being retired, then you are entitled to a capital credit retirement, even if you move out of the service territory.  Before a new year is retired WIN Energy mails retirement notices to the members who began service with us that year.  The purpose is to update our records with current address and contact information.  Retirement checks are only mailed to those members who return the retirement notice.  Members who return their notice will continue to receive future retirements.  Please update us with any future address changes.