Capital Credits
As a member of a rural electric cooperative, you are part owner of a business. You have pooled your money with other members and created equity for your Rural Electric Cooperative to buy electricity and provide services at an affordable cost. Since Cooperatives are nonprofit, they return any margin to members through the capital credits process.
Annually, active members receive a capital credit statement showing the amount of contribution to the capital account for the calendar year. This amount is determined by how much electricity is used during the previous year. This is not a check and cannot be cashed, or credited, toward your bill. It is simply a statement of the status of your capital credit account.
If you disconnect a service or relocate, the amount of capital credits that have been allocated to you will remain in your name. When we retire the capital credits for the year, or years, you were on our service, yours will be refunded to you also. For this reason, we advise our members who leave our system to keep us updated with a current address.
Capital credits are paid out in three different ways. The first one is the annual capital credits distribution which is paid out at the time of our annual meeting in June each year. The Board of Directors determines the amount of capital credits to be distributed on an annual basis. The determination is based on RUS regulations and the financial condition of the cooperative. The capital credit retirement is based on an 18-year average retirement schedule.
The second way is when members or former members attain the age of 73. In the event of a joint membership, the age of the younger member applies. An option form is mailed out in the fall of the year prior to the members’ 73rd birthday. At that time, a decision needs to be made whether to withdraw the balance of your F.E.M. capital credits or waive the right to withdraw them and continue to get an annual capital credits retirement. If you elect to withdraw the F.E.M. portion you waive your rights to any future retirement of the East River and Basin portion. These funds are then retained by F.E.M. Electric and used at the discretion of the board.
The third way is the capital credits being paid to the estate of a deceased member. When a member passes away, the executor/executrix of the estate must apply for the capital credits and provide a copy of the death certificate. When the paperwork has been completed and returned to F.E.M., it will be presented to the Board of Directors for approval. A check for the balance of the F.E.M. portion of capital credits will be mailed to the estate.