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Capital Credits

To read more about the basics of capital credits please click here Capital Credits Explained.

As a cooperatively owned business, any margins generated by the Co-op are allocated to member/owners, proportionate to the amount of energy they purchased from the Co-op during the year. In order to operate prudently and to meet the requirements of our lenders, the Cooperative each year must budget to collect slightly more in revenue than our estimated expenses. These “margins”, which are allocated as capital credits, become patronage capital and are used by WEC for operating capital, necessary reserves, storm damage and other contingencies.

When/How are capital credits allocated?

The May bill each year contains a notice to current members of their capital credit allocation for the previous year while members who become inactive during the year receive a Patronage Allocation Form in the mail. The capital credit allocation represents each member’s share of the margins realized by the Cooperative as of December 31.  These margins are allocated to all participating members in proportion to their patronage, which is their total billing for energy use in the previous year.  The current total of assigned capital credits that appears on the bill or patronage form represents the total amount accumulated to each member’s capital credit account to date, minus any prior refunds that have been made.  This credit cannot be applied to the energy bill.

When are capital credits refunded?

Patronage capital is refunded (paid back) to the members when certain financial conditions permit and bylaw provisions are met. Each year the Board of Directors decides if capital credits will be retired.   They then approve an equity distribution plan which includes the total amount to be refunded, the allocation years to be retired and the percentage to be refunded for each year.  The board also decides on an annual basis if they are going to pay estates in full or treat them as they do all other capital credit allocations.

Since 1998, the Cooperative has been refunding a portion of the capital credits that have accumulated to members’ accounts.  Capital credits are currently returned to both former and current members.  The Board of Directors believes this distribution method enables the Cooperative to continue its fiduciary obligation to those patrons whose capital has been invested in the system the longest, while fostering a better understanding by current members of the value of cooperative ownership.

Active accounts, those still using power, automatically receive a credit to their November bill for the amount of the retirement.  Inactive accounts, however, must have at least $20 being retired in order for a check to be issued.  Each year a former member qualifies for a refund, they are mailed a patronage capital credit authorization form to the last address we have on the account.  At that time, the former member named on the authorization form is instructed to sign the form and return it to us.  If the individual named is deceased, it will be necessary for the surviving spouse to furnish the cooperative with a copy of the death certificate.  If there is no surviving spouse, it is necessary for the heir(s) to furnish copies of the death certificate(s) and a will or decree of distribution stating who is to receive the “rest, residue and remainder of the assets”.  Once the supporting documentation is received and accepted, our records are updated and a check is issued.  If future authorizations are sent, they will contain the updated name(s) and will just need to be signed and returned unless the individual(s) then named on the account is/are no longer living.  In that case, the process will begin again.

Members who cease to purchase services from the Cooperative should notify WEC of any change in address as there will be future correspondence about the payment of accumulated capital credits. Often times the cooperative is not notified of any address changes so capital credit correspondence becomes  undeliverable and many times abandoned or unclaimed.  We are required to print a list of the names of the members whose correspondence is undeliverable in one issue of our newsletter, Co-op Currents.  We usually list 800+ names along with an article which is usually entitled “Co-op Seeks Former Members for Capital Credit Refunds”.  In addition, WEC places a block ad in a local newspaper which usually contains the title:  ATTENTION ALL CURRENT AND FORMER MEMBERS OF WASHINGTON ELECTRIC COOPERATIVE, INC. and states that WEC is retiring capital credits for the named years.  The ad requests former members to contact us if they received service during the years being retired as they may qualify for a refund.

Both current and former members are given the opportunity to donate their capital credit refunds (for the current refunded year or for the current and all future years) to the WEC Community Fund.

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