What are Capital Credits?

One of the benefits of being served by an electric cooperative like Farmers’ Electric are “capital credits.” When Farmers’ Electric makes more money than it needs for operating costs, capital improvements and cash reserves, we allocate that money to you, our Member-Owners, in the form of capital credits.

Capital credits are allocated to each individual Member based on how much the Member paid the Cooperative for electricity during a particular period. Everyone who has an account with Farmers’ Electric is a Member of the Cooperative.

After an annual review, if there is money over and above normal operating expenses, and Farmers’ Electric is financially able to do so, the money is returned to Members in the form of a capital credit refund. The amount of a Member’s capital credits refund depends on the length of time they have been served by the Cooperative and the amount of energy the Member has purchased.

Because the formula for distribution is based on prior years of operation, often Members who are entitled to capital credits have moved. If you cease to purchase energy from Farmers’ Electric Cooperative, please keep us informed of your address in future years. This will enable us to forward payment when the capital credits are refunded for the year or years of your membership. If the Postal Service returns a mailed check to the Cooperative, we make every effort to locate that person including publishing the name in the monthly newsletter and area newspapers. After a period of time, these refunds will then become unclaimed property and be retained by the Cooperative in accordance with the Cooperative’s Bylaws. 

Interest is not paid on capital credits since it would raise rates and only result in charging the Member more just to pay back the additional interest money.  Your Cooperative does pay capital credits in case of death in order to assist in the closing of estates.