Capital Credits

The dif­fer­ence between a coop­er­a­tive such as Coastal Elec­tric and an investor-owned util­i­ty is that a coop­er­a­tive is owned by the mem­bers 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.

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 Coastal 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.

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.

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

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 Decem­ber in the form of checks that are mailed out to the mem­ber­ship.

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

Cap­i­tal cred­its of a deceased mem­ber are paid to his or her estate fol­low­ing the same retire­ment meth­ods that all mem­bers are sub­ject to. Rep­re­sen­ta­tives of a deceased mem­ber’s estate will receive a check each year for every year in which that mem­ber received ser­vice. Of course, all cap­i­tal cred­it checks, includ­ing those to estates, will only be writ­ten when it is deemed that the coop­er­a­tive is finan­cial­ly strong enough to retire cap­i­tal cred­its that year. Con­tact us if you have ques­tions about a deceased mem­ber’s cap­i­tal cred­its.

Assign­ment of Future Cap­i­tal Cred­its [PDF]

In the event of a divorce, a joint mem­ber­ship may be dis­solved and the mem­ber­ship con­vert­ed to the now-sin­gle account of the par­ty remain­ing at the ser­vice address. That mem­ber may then receive future Cap­i­tal Cred­its. Down­load the Trans­fer Cap­i­tal Cred­its from Liv­ing Per­son to Liv­ing Per­son [PDF] to fill it out, have it nota­rized, and return it to Coastal Elec­tric.

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.