Unlike investor-owned utility companies that strive to generate profits for shareholders, electric cooperatives like OEC operate on an at-cost basis. Any profits made by OEC—referred to as margins—are returned to the consumer-members. Capital credits represent these dividends.
Capital credits are calculated each year in which OEC makes a profit and distributed to each member in proportion to his/her electrical usage for that year. OEC retains and uses capital credits for operating capital until the financial condition of the cooperative, determined by its banker, National Rural Utilities Cooperative Finance Corporation (CFC), and OEC’s board of trustees, permits the co-op to issue a refund. OEC has returned more than $10 million in capital credits to co-op members during the last five years and plans to return over $2 million in October 2017.
When and how are capital credits returned?
Returning capital credits is a two-step process:
Step One: Allocation
First, an allocation determines each member's share of the cooperative's margin for a given year. Margins are allocated—or assigned—to members who purchased electricity from the cooperative during the year in which the margin was generated in proportion to the electrical sales for that year. Each member’s allocation is determined by his/her kilowatt-hour consumption for that year. The co-op keeps a permanent record of each member’s capital credit account, which is where the allocated amount remains until it is paid—or "retired."
Step Two: Retirement
After reviewing the financial health of the cooperative, the board of trustees may declare a retirement, at which time all or part of each member's allocated amount is paid. OEC uses a first-in, first-out method (FIFO), meaning earlier years are paid before later years. OEC has retired capital credits for all years through part of 2007.
Who will receive money this year?
For 2017, the board of trustees approved a capital credit retirement of over $2.6 million, reflecting the capital for the remaining part or 2007. OEC members who purchased electricity from the co-op during 2007 are eligible to receive a check pending address verification. Over half of the money will go to members who still have active services.
What does OEC do with capital credits not yet retired?
Capital credits are a significant source of equity for most electric cooperatives. Equity is used to help meet the operating expenses of the co-op, such as paying for new equipment to serve members and repaying debt.
What does OEC do with unclaimed capital credits?
Sometimes, OEC does not have a good address for a member and therefore does not mail a check. Other times, for whatever reason, a check will go uncashed. This money is considered "unclaimed." Once a year, OEC publishes a list of names associated to unclaimed capital credits on this website. Members on the list may complete the address verification form to provide a good address to claim their refunds. Checks are mailed only if the dollar value of the check is greater than $25, or if the customer's balance was lower than $25 but has no future allocations.
What happens to capital credits belonging to deceased members?
A rightful heir can complete a Certification of Entitlement form, which must be notarized, and provide the appropriate documentation to transfer the capital credits into his/her name.
Capital Credit Forms (Adobe Reader required)
Certification of Entitlement to Deceased Member's Benefits
Patronage Capital Credit Address Update
Name Change due to Divorce
Name Change due to Marriage
Name Change due to Divorce and Re-marriage
Donate Capital Credit Funds to Operation Round Up®