What are Capital Credits?
Member-owned cooperatives are not-for-profit organizations which are operated for the benefit of their members. Members should always consult their bylaws which control how capital credits are calculated and handled by Coast Electric.
In general, if there are revenues from electric services in excess of operating costs and expenses, those funds are credited to a member’s capital account based on their patronage. Such funds, which are also called ‘capital credits,’ are the life blood that enables cooperatives to satisfy the future growth and power needs of its members. Capital credits represent a critical source of equity for Coast Electric.
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.
Each member is allocated capital credits based on how much energy the member obtains from the cooperative. The more energy a member purchases, the greater the amount of capital credit allocated to the member’s account. At the end of each year, we subtract operating costs and expenses from operating revenue collected during the year. This difference is called margins, which are allocated to the members on the basis of patronage.
When the board retires capital credits, they are mailed in the form of a check to a member’s last known address based on how much power they have purchased from the cooperative. This is why it is important for you to always keep Coast Electric informed of your current address.
Capital credits allocated to Coast Electric members always belong to that member, even if they move outside of the co-op’s service area or pass away. There are two options for Coast Electric members who move outside of the service area, and for the families of members who have passed away.
Option 1 – Former members – those who have passed away or who have moved outside of Coast Electric’s service area with inactive accounts still receive capital credit retirements until the balance is completely refunded.
Option 2 – Former members now living outside of the service area, or the estates of deceased members, may request an early retirement of their allocated capital credits. An early retirement would offer a one-time payment of capital credits associated with the account on a net-present-value basis, less any bad debt that needs to be collected.
For inactive members who would like to have their capital credits paid early, the following items will need to be completed and notarized:
- Application for early capital credit retirement OR Early capital credit retirement request for the estates of deceased members
- If applicable, a copy of appointment of personal representative (i.e. will and/or any other documents deemed necessary)
- A W-9 may be required for refunds. (www.irs.gov)
- All electric accounts for the member must be closed prior to the year early retirement is being requested. If you choose not to take advantage of this one-time payment, any future payments will be paid according to Coast Electric’s current policies. If you have any further questions, please call 877-769-2372 or send an email to [email protected]
Coast Electric has a Board of Directors that has been elected by the members. The board members are all members of the cooperative and motivated by a desire to maintain reliable service at a fair rate.
The board decides how to use the capital provided by the members and the amount, if any, that may prudently be retired to members in a particular year. The amount retired to members depends upon the financial condition of the cooperative and its strategic plan for growth and operations.
This will obviously vary according to each year’s particular financial and operational situation.
Coast Electric has paid more than $61 million in capital credit retirements to current and former members by the end of 2018.
Any member who has purchased electricity from Coast Electric during the time period being retired is eligible to receive a capital credit check. The minimum retirement check that will be mailed to members is $10. If your retirement is under the $10 minimum, your capital credit will remain in your account until your retired balance exceeds $10. At that point, a check will be distributed during the next retirement period. If you have questions about your capital credit account, you may email us at [email protected], log on to your account at www.coastelectric.coop, call 877-769-2372 to inquire or visit one of our local offices.