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Capital Credits

As a nonprofit electric cooperative, Capital Electric allocates our annual operating margins, or profits, to members receiving service during the year. These margins (revenue in excess of expenses) are allocated using a proportional ratio (using the dollar amount of electric service that each member purchases in a year compared to the total electric service purchased by all members) and are called capital credits. They are used by Capital Electric for operating funds and paid back to our members as the financial condition of the cooperative permits and as bylaw provisions are met.

If you cease to purchase energy from Capital Electric Cooperative, please keep us informed of your address in future years. This will enable us to forward payment when the capital credits are refunded for the year or years of your membership.

NOTE: We are currently searching for a number of members that had service with us for whom we attempted to send capital credit checks to but which were returned as undeliverable. If you recognize anyone on this list, please contact us and let us know how we can get ahold of these past members. Thank You.

Please Remember

  1. Your Capital Credit Allocation Statement (PDF) that arrives in the mail during the April/May timeframe is not a bill. You do not owe those amounts.

  2. These amounts are NOT now payable and do not represent cash, but rather your equity in Capital Electric Cooperative, Inc.

  3. You cannot apply these amounts to your electric bill.

Frequently Asked Questions

  1. What are capital credits?
  2. How do capital credits work?
  3. When are capital credits returned to members?
  4. Is my capital credit allocation taxable?
  5. What should a member do if he or she moves from our service area?
  6. What happens in case of a deceased member?
  7. How does a member know the amount of his or her capital credits?
  8. What if a member of a joint membership is deceased?
  9. What if I had service at more than one location at the same time?

What are capital credits?

The difference between a cooperative such as Capital Electric and an investor-owned utility is that a cooperative is owned by the member-customers it serves. As a member-owner, you share in the profits of the co-op. At the close of each fiscal year, all revenue received in excess of expenses (i.e. profits) is allocated back to the membership in the form of capital credits. This allocation is based on the dollar amount of electricity purchased during the same year.

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How do capital credits work?

You need to know two things about capital credits in order to understand how they work for you:

1. Allocations: Each year, you are "allocated" your portion of the previous year's profit based on the amount of electricity you purchased from Capital Electric Cooperative (CEC) in relation to the total amount of electricity purchased by all members during the year. This amount is put into a "holding account" for a number of years and used by CEC to fund capital needs for items such as power line construction, transformers, trucks, inventory and other equipment. This is an underlying principle of the cooperative business model and is one more way we keep your electric rates as low as possible. This "allocation" becomes your equity in the cooperative and is maintained in a separate account assigned to you. View a sample allocation (PDF) statement online.

2. Retirement: This is what you will get in cash at a later date. CEC uses the amount "allocated" to you for a time, but then returns this amount to members in the form of "retirements," which are actual "cash back" dollars to you.

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When are capital credits returned to members?

Per cooperative bylaws, your locally elected Board of Directors determines the amount of retirement (cash back) each year, based on the financial condition of the cooperative and other considerations. These payments are usually made in June in the form of checks, first available at CEC's annual meeting and mailed out shortly thereafter if not picked up at the annual meeting.

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Is my capital credit allocation taxable?

For individuals, capital credits are generally not taxable. We suggest you seek the advice of a tax professional for any specific questions.

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What should a member do if he or she moves from our service area?

The member should inform our office of any changes in his or her mailing address. It is a member's responsibility to make sure the cooperative has up-to-date address information at all times. Each year, hundreds of refund checks are returned to the cooperative with invalid addresses. CEC can be contacted by phone, fax, or email to update an address.

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What happens in case of a deceased member?

The Capital Electric bylaws provide for the option of an early retirement of the capital credits of a deceased member to his or her estate (No early retirement of capital credits is allowed in the case of dissolution of a corporation or partnership). Representatives of a deceased member's estate can choose whether to receive the deceased member's capital credits in the form of a present valued lump sum payout or to wait and receive the monies as they are retired as part of the normal, non-discounted retirement process of the cooperative. To find the dollar amount of the discounted estate retirement, the executor of the estate must contact the cooperative. When ready to make an election regarding the deceased member's estate, the executor of the estate must fill out and sign one of two forms:

  • If a personal representative is or will be appointed by the court, then a Request for payment form must be signed. This form, along with a copy of the Letters Testamentary or Letters of Administration for the estate of the descendent must be turned in.

  • If a personal representative is not going to be appointed by the court, then a Capital Credit Affidavit statement, of which requires notarization, must be used. Please note two important requirements related to this form:

  • In order to use this form, the value of the entire estate of the decedent that is subject to distribution or succession under N.D.C.C Chapter 30.1-01 through 30.1-23, wherever located, less liens and encumbrances, cannot exceed Fifty Thousand Dollars ($50,000.00). If this threshold is exceeded (i.e. $50,000.00), then the State of North Dakota law requires that a personal representative be appointed). NOTE: Typically, the value of the estate "that is subject to distribution or succession under N.D.C.C Chapter 30.1-01 through 30.1-23" less liens and encumbrances is property that is NOT joint property. Capital Electric is NOT responsible for making this determination and recommends you attain proper legal advice if you have questions in making this determination.

  • Thirty (30) days or more must have elapsed since the death of the decedent prior to the signing and notarizing of the Capital Credit Affidavit statement.

If you wish to have CEC personnel notarize the affidavit (free), please call ahead to ensure that a notary public will be available. The completed Capital Credit Affidavit and a copy of the death certificate are needed to complete the capital credit transfer or estate retirement.

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How does a member know the amount of his or her capital credits?

Each member has a separate capital credit account, which represents the member's ownership in the cooperative. When capital credits are allocated at the end of a year, all members who received electric service during that year will receive an allocation notice showing their current year's allocation and the outstanding balance of all year's service.

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What if a member of a joint membership is deceased?

Upon the death of either spouse in a joint membership, the name of the deceased person is removed from the membership and the membership is then held solely by the surviving spouse. A joint membership is eligible for an early discounted estate retirement upon the death of one of its members, but only for the portion of the decedent (one half of the membership). A copy of the death certificate is required.

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What if I had service at more than one location at the same time?

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Members with multiple accounts for different locations will receive a consolidated capital credit allocation statement and/or check whenever possible, grouped under a single membership number. Please note that at times, a separate capital credit allocation statement and/or check will be sent to you. The detail on each account will be displayed on these forms for ease of tracking.

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