Frequently asked questions about capital credits

Posted on May 26 2022 in Harrison REMC
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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 credit 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.