Capital Credits

The difference between a cooperative such as Western Cooperative Electric Association, Inc., 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.

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 Western Cooperative Electric (WCE) 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 WCE 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 (JPG) statement online.  In addition to Coop Allocations, there may also be Generation and Transmission (G & T) allocations.  G & T allocations are the capital credits allocated to your account from the margins allocated to WCE from our power supplier.

2. Retirement: This is what you will get in cash at a later date. WCE 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.  The G & T allocations work in the same manner, but cannot be paid out until our power supplier is able to "retire" the amount "allocated" to WCE.

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.

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

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. WCE can be contacted by phone, fax, or email to update an address.

The Western Cooperative Electric Association, Inc., 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 to receive the deceased member's capital credits in a lump sum payout.  To find the dollar amount of the 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 payment is to be made to an estate, an administrator or executor 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 payment is to be to a trust, a notarized Affidavit of Transferring Certain Personal Property must be completed by the trustee, along with a copy of the page from the trust that names the trustee.  A copy of the death certificate is also required.  The check is made payable to the trust.

• If a personal representative is not going to be appointed by the court, then a Affidavit of Death and Heirship form, which requires notarization, must be used along with a Request for payment form.  This allows a check to be made payable to the heirs. If the total value of the credits is less than $2500, a Bond of Indemnity form may be filled instead, allowing a single heir to claim responsibility of distribution to the other heirs.

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

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.

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.

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.