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Capital Credits

You might not realize it, but when you signed up to receive electric service from Whitewater Valley Rural Electric Membership Corporation (REMC) you became a member—and owner—of a cooperative electric utility. While investor-owned utilities return a portion of any profits back to their investors, electric co-ops operate on a not-for-profit basis. So instead of returning profits, known as margins, to investors who might not live in the same region or even the same state as you do, we periodically retire capital credits (also called patronage capital or equity capital) based on how much you paid the co-op for electricity during a specified time period.

In 2017, our Board of Directors refunded ten percent of cooperative margins from 2016, sixty-three percent of Generation & Transmission margins from 1988, and seventy percent of Generation & Transmission margins from 1987.

The amount you receive is based on two factors: if you were a member during the years being retired and the amount of power you used during those years.  Checks were mailed to active (current) members of WWVREMC and former members of Fayette-Union Co. REMC and Wayne Co. REMC with a valid address on file in December.  Active accounts due a capital credits distribution of less than $10 received a credit on their electric account.  Inactive accounts due a capital credits distribution of less than $10 will be added to future year's retirements.

Common Capital Credits Questions:

What are capital credits?

Retained margins left over at the end of a year at a not-for-profit electric cooperative. Capital credits represent the most significant source of equity for Whitewater Valley REMC. Since a cooperative’s “shareholders” are also the people the co-op serves, capital credits reflect each member’s ownership in the cooperative. This differs from dividends investor-owned utilities pay shareholders, who may or may not be customers of the utility.

Where does the money come from?

Member-owned, not-for-profit electric utilities like Whitewater Valley REMC set rates to generate enough money to pay operating costs, make payments on any loans, and provide an emergency reserve. At the end of each calendar year, we subtract operating expenses from the total amount of money collected during the year. The balance is called a “margin.”

How are margins allocated?

Margins are allocated to members as capital credits based on their purchases from the cooperative—how much power the member used. Member purchases may also be called patronage.

Why does my cooperative refund capital credits?

Doing so follows one of our seven cooperative principles—Members’ Economic Participation. This principle states: “Members allocate surpluses for any or all of the following purposes: developing the cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership.”

Are capital credits refunded every year?

Each year, the Whitewater Valley REMC Board of Directors makes a decision on whether to refund capital credits based on the financial health of the cooperative. During some years the co-op may experience high growth in the number of new accounts added or severe storms may result in the need to spend additional funds to repair lines. Both events might impact margins, causing the board to defer any capital credits refunds in order to maintain the financial health of the cooperative. For this reason, Whitewater Valley REMC's ability to return margins to members in the form of capital credits reflects the cooperative’s strength and financial stability.

Do I lose my capital credits in the years the co-op decides not to make refunds?

No. All capital credits from every year members have been served by Whitewater Valley REMC's are maintained until such time as the board refunds them. Capital credits are a significant source of equity. This equity is used to help meeting operating expenses of the cooperative, such as paying for equipment to serve members and repaying debt.

How often do members receive capital credits?

The Whitewater Valley REMC Board of Directors makes a decision each year whether or not to retire capital credits. When the cooperative is able to achieve and maintain appropriate financial parameters that keep the coopertive sound and viable, the board authorizes the retirement of capital credits to the members.

Currently, the cooperative pays capital credits for estates, upon death of member, on a cash-discounted basis. If you have an estate capital credit claim please download the Capital Credit Estate Forms below and follow the instructions for filing and Estate Capital Credits Claim. Mail the completed forms to our office for review. A cooperative representative will contact you if we have further questions regarding the claim.

Is the capital credit check considered income and will I be taxed?

In most cases, your capital credit check is not taxable unless electricity is claimed as a business expense. We suggest that you consult with your tax advisor regarding the appropriate tax treatment of your individual capital credit check.

Below are forms necessary for filing a capital credit claim with the cooperative.

Click here to download the Address Verification Form

Click here to download the Proposal for Payment - Individual Form

Click here to download the Instructions - Capital Credit Claim for Estate

Click here to download the Affidavit for Transfer of Assets

Click here to download the Instructions - Capital Credit Claim for Dissolved Business

Click here to download the Proposal for Payment - Business Form

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