Capital credits

Harrison REMC is returning money to member-owners

Posted on Jul 25 2019 in Harrison REMC

The board of directors of Harrison REMC has approved paying capital credits in 2019 in the amount of $1.25 million for patronage allocated during the period of 1981-1984. The board is excited to return your investment in your electric cooperative with this capital credit retirement. As a member of Harrison REMC during these years, you helped provide the funding to build and maintain the electric system. As a not-for-profit cooperative, all funds not used to pay the wholesale power bill and operating expenses are invested in the facilities. 

The capital credit check or bill credit you will receive reflects your portion of the margins (profit) made and invested during that time period. With this general retirement, over $9 million has been returned to members who participated in the cooperative’s business. Unlike investor-owned utilities that pay dividends to their stockholders who are often far removed from the service provided, cooperatives return their margins to the members who used the service and provided an important investment. 

We believe this is just one of the cooperative differences that make serving you and our communities a pleasure.

Checks will be sent at the end of August, and bill credits will appear on September statements.

If you are not familiar with capital credits, see below for a more detailed description of what they are, who is getting paid and how allocations are made. We will provide more information about the return of capital credits in future issues of Indiana Connection. If you have any questions regarding this announcement, please call our office at 812-738-4115 or 812-951-2323 for further information. 

Notice of 2018 capital credit allocation

As a not-for-profit electric cooperative, Harrison REMC is obligated to allocate, by credits to a capital account, all amounts in excess of operating costs and expenses at the end of each fiscal year. This patronage capital is allocated to each and every member of the cooperative, based on the contribution of patronage (revenue) by each member for that particular year.

To determine your capital allotment as a member of Harrison REMC, first determine your electric bill amount for the year (your bill amounts, less tax and less miscellaneous charges), then multiply this amount by the following allocation factor — .11008.

Frequently asked questions about capital credits

Q: What’s the difference between allocated and retired capital credits?

A: Allocated capital credits appear as an entry on the permanent financial records of the co-op and reflect your equity or ownership in Harrison REMC. When capital credits are retired, a check or bill credit is issued to you and your equity in the co-op is reduced.

Q: How are capital credits calculated?

A: The amount of capital credits you earn in a given year is based upon the amount of capital you contribute to the co-op through payment of your monthly bills. The more electric service you buy, the greater your capital credits account. The sum of your monthly bills for a year is multiplied by a percentage to determine your capital credits.

Q: What do I have to do to start accumulating capital credits?

A: Capital credits are calculated by Harrison REMC for every member who purchased electricity during a year in which the utility had a profit. No special action is required to start a capital credits account. Your membership activates your capital credits account.

Q: What percent of my bill is allocated as capital credits?

A: The percentage of your total payment that is allocated as capital credits varies from year to year, depending upon the amount of profits recognized on the REMC’s income statement. Capital credits are only allocated for a year in which the REMC had a profit. Since capital credits are a member’s share of the profits, no credits are allocated for a year without any profit.

Q: Do I have to be a member for an entire year to earn capital credits?

A: No. Capital credits are calculated based upon a member’s monthly bills. If you are billed for service for even one month, you will accumulate some capital credits.

Q: What happens to the capital credits of a member who dies?

A: The traditional option is for an estate to be paid out on the same schedule as other members, as part of normal retirements for a given year of service. Another option is for heirs of a deceased member to request the capital credits pay out early by choosing to receive a discounted present value amount. With all options, an authorized representative or family member for the estate must request the credits by submitting required documentation. 

Q: Can the capital credits be sent to a charity?

If desired, members or heirs can choose to have the refunds donated to a charity of their choice.

Q: Will I receive a capital credit check or bill credit every year?

A: Not necessarily. When considering a retirement, the board analyzes the financial health of the cooperative to determine if a retirement or payment can occur.

Q: What happens to my capital credits when I leave the Harrison REMC service area?

A: They remain on the books in your name until they are retired. You should ensure that the REMC has your current mailing address.