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Your share of Capital Credits is one of the most tangible benefits of belonging to a cooperative committed to customer service, value and member satisfaction. In December 2011, CoServ Electric will return a total of $9 million to current and former Members in the form of Capital Credit retirements, bringing our total Capital Credit retirements to approximately $40 million since 2003! Capital Credit checks and bill credits will be mailed beginning Dec. 15, 2011.
Review Capital Credit documents:
2011 Allocation Notice
2011 Retirement Notice—Current Members
2011 Retirement Notice—Former Members
2011 Retirement Notice—Estate Letter
To learn more, review Article 7 of our bylaws.
Here’s a closer look at how the process works:
What exactly are Capital Credits?
Unlike electric utilities that generate margins on behalf of investors and shareholders, electric cooperatives sometimes return the margins earned by the electric cooperative to their members. Each year, any margins earned by CoServ Electric are reinvested in the cooperative. At the same time, the value of the margin is proportionally allocated (based on electric purchases during the year) to Capital Credit accounts maintained for each of our current Members. When the Board of Directors has determined that the cooperative has met its financial requirements and any other obligations, they may decide to retire (pay) the Capital Credits to the Members.
When will I be paid for my Capital Credits?
Capital Credits may be retired at the discretion of the CoServ Electric Board of Directors when the cooperative has met certain financial requirements and other obligations. A retirement cycle is the period of time between the allocation and retirement of the Capital Credits and can typically be 20 or more years for electric cooperatives.
Why are more recent years' Capital Credit retirements paid at a discount?
CoServ Electric is paying you the discounted, net present value of these Capital Credits today, as opposed to waiting to pay the face value of these Capital Credits at the end of the normal cycle, which can typically be 20 or more years. CoServ Electric wants our Members to realize the benefits of Capital Credits today in the form of a cash payment or credit, and net present value discounting accomplishes that goal.
What happens to my Capital Credits if I move and terminate service with CoServ Electric?
If you terminate service with CoServ Electric, you will become a former Member and will no longer receive future allocations. The existing Capital Credit balance will be maintained in a Capital Credit account in your name until it is retired in full. When and if the CoServ Electric Board of Directors elects to retire any Capital Credits in the future, a check will be mailed to the last forwarding address on record.
NOTE: It is the former Member’s responsibility to maintain a correct mailing address with CoServ Electric.
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