Capital credits

Intercounty to return $1.8 million in capital credits to member/owners

Intercounty Electric Cooperative’s board of directors has authorized the refund of $1.8 million in capital credits to the co-op’s member-owners, the organization announced last week.

Extreme weather in IECA service area coupled with sound management and hard work by the employees have contributed to the cooperative’s financial ability to return the approximately $1.8 million in June, Intercounty said. Checks were in the mail June 14.

To understand why capital credits are issued, there needs to be an understanding of the difference between an electric cooperative and a municipal or an investor-owned utility, Intercounty said. Intercounty is a not-for-profit electric cooperative owned by those it serves. In a cooperative, each member is an owner of the utility system unlike a municipal or investor owned utility. Members of a cooperative have a direct input on how the cooperative is run through their elected director to the board of directors, who are also members of the cooperative. Capital credits are the cooperative’s margins or monies remaining at the end of the year after all the bills are paid.

Capital credits are generated whenever revenue exceeds expenses. By allowing the cooperative to use the capital credits, Intercounty Electric said it needs to borrow less money to operate or has less need to generate additional revenue through rate increases. This saves the members money by reducing the amount of interest that would normally be charged for using loan funds. Capital credits are returned to the member when the financial condition of the cooperative permits.

 

Capital credits are allocated to each member of the cooperative every year based on the participation in the cooperative. The allocations are based on the total dollar amount of electricity purchased. In other words, members receive cash back based upon how much electricity they use.

With this year’s disbursement, the cooperative has returned $19,520,037 in discounts and capital credit refunds since 1988. The capital credits being refunded this year represent the balance of the allocations for 1994. Persons will receive a capital credit refund check if they received service during 1994.

Anyone moving should leave a forwarding address with Intercounty. Officials said to check IECA’s capital credit checklist for 2008 inside the June “Rural Missouri” issue for unclaimed capital credit checks.

Normally, capital credit payments do not have to be reported on tax returns. Questions about tax liability should be directed to the person’s tax preparer.

 

 

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