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 Lane Electric 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 co-op for up to 30 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 co-op, such as paying for new equipment to service 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 Lane Electric’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.
Once it has been decided that the cooperative will retire capital credits for a specific year(s), members are mailed a Notice of Capital Credit Retirement with the following information and options:
- Do nothing further if you would like to have the credit applied to your August electric bill or,
- You may elect to wait for 30 years to receive the full value of your capital credits or,
- You may opt to donate them to Lane Electric’s Member Assistance Program (MAP) or,
- You can donate them to the research and development of Renewable Energy
IMPORTANT TO UNDERSTAND: If you do not want the credit applied to your August bill, you must select one of the alternate options. Complete the information and return it to Lane Electric at 787 Bailey Hill Road, Eugene OR 97402. Based on your selection, we will adjust your account upon receipt.
What Does Lane Electric Do With Unclaimed Capital Credits?
Lane Electric seeks out the former member-owners who are due capital credits, even if they are no longer on our system. Approximately once a year, the co-op will post the names of the member-owners who have unclaimed capital credits in local papers. If after the 30-year period, and a 4-year notification process, the capital credits remain unclaimed, they become part of the cooperative’s permanent equity.
Other Capital Credit Questions?
If you have other capital credit questions, please contact Lane Electric at (541) 484-1151.