Capital Credits

Capital Credits: A Member Advantage

Capital Credits

Capital Credits are a valuable and unique benefit of being a member-owner of a co-op. As a not-for-profit organization, your co-op operates at cost. Any revenue collected beyond the expenses required to run the cooperative represents the 'margins.' These margins aren't profit in the traditional sense; instead, they belong to you, our members, who collectively own the cooperative.

Each year, these margins are allocated to members as capital credits based on their electricity purchases during that period. This allocation reflects your ownership stake. Over time, as your co-op's financial condition allows, the Board of Directors approves the 'retirement' or payout of these allocated credits back to the members. Throughout our history, we have proudly returned millions of dollars in capital credits to those who have helped build and sustain the cooperative.

However, because members sometimes move away without providing a forwarding address, ensuring every past member receives their earned capital credit payments can be challenging. Consequently, some checks may remain uncashed or unclaimed for years.

We encourage you to use the search tool provided to see if there are any unclaimed capital credits associated with your name, or perhaps the name of a family member or friend who was once served by your co-op. Finding unclaimed credits can provide a welcome surprise, representing your share of the cooperative's success from years past.

FAQs

Capital credits are a unique benefit of being a member-owner of an electric cooperative. Because cooperatives operate on a not-for-profit basis, any margins—revenues remaining after all operational expenses are paid—belong to the members themselves. These capital credits reflect each member's ownership stake and are returned based on how much electricity they used during the year the margins were generated. The process involves two main steps: allocation and retirement.

The first step is Allocation. Each year, the cooperative determines its margins, and your share is calculated based on your electric usage for that period. This amount is formally assigned or "allocated" to your capital credit account. Your co-op meticulously tracks the amount allocated to each member to ensure accuracy when the time comes for these credits to be returned.

The second step is Retirement, which refers to the actual payment of capital credits back to members. Before retirement happens, the allocated capital credits are retained by the cooperative, often for a period up to 25 years, forming the cooperative's equity. This equity is crucial; it's the most significant source of funding for the co-op, used to cover essential expenses like maintaining and upgrading the electric system (poles, wires, equipment), meeting financial obligations, and reducing the amount of money that needs to be borrowed. By using this member-provided equity, the cooperative can help keep electricity rates more affordable.

Finally, the decision to retire capital credits rests with the Board of Directors. Each year, the Board evaluates the cooperative's financial health and stability. If conditions are favorable and it's deemed financially prudent, the Board will approve the retirement (payout) of capital credits allocated for a specific past year or years. When capital credits are retired, members who received electric service during those designated years receive their share, typically as a check or bill credit.

Your co-op diligently attempts to locate former members who are owed Capital Credits, even if they are no longer active on their system. However, if these Capital Credits remain unclaimed for a period of three (3) years or more, your co-op redirects these funds to a dedicated fund that supports charitable and educational initiatives such as scholarships, Youth Tour, and various community donations.

Upon the passing of a member, their accrued Capital Credits can be addressed by their estate. Your co-op's Board of Directors has a policy that allows for the early retirement or payout of these Capital Credits to the legally appointed representative(s) of the deceased member's estate.

To initiate a claim for these Capital Credits, the legal representative(s) must complete and notarize a specific affidavit. This notarized affidavit, along with a copy of the deceased member's death certificate and documentation verifying the appointment of the personal representative (if applicable), must be submitted.

It's important to note that Capital Credits claimed early due to the death of a member are typically returned at a discounted rate compared to the standard retirement schedule. This early payout provision is in place to facilitate the settling of the deceased member's estate.

$3.5 Million returned to members in 2023

A capital credit refund of $3.5 million was refunded to every member using South Plains Electric Cooperative's service in 1987, 2003, 2005 and 2022.

If you were entitled to more than $10, you will received a check from us in December. If the amount was less than $10, you will receive a credit on your bill.

Your Cooperative has returned capital credits (margins) to members since 1964 - it's nothing new. A grand total of more than $53.5 million in cash has been returned to members in our local communities - not to distant stockholders.

For complete details on our 2023 capital credit return, click here.