As a member of Pedernales Electric Cooperative, you’re also an owner. When you make a payment to PEC, a portion of that money goes toward strengthening the operations that power your life. Those funds are called capital credits, and they are used to invest in capital additions and improvements to ensure system reliability and meet the growth demand PEC is experiencing. This reduces the need for interest-bearing loans, which helps to keep costs down. A record of your investment, or capital credit account, is established in your name when you become a member of the cooperative.
Each year, any funds remaining after expenses have been paid (margins) are allocated to your capital credit account. Capital credits, which are based on the amount of electricity each member uses, vary from member to member and year to year. The PEC Board of Directors, after assessing the financial condition of the co-op, determines what portion of margins can be returned or distributed to members.
This process helps keep the cooperative financially stable while offering members the benefit of a distribution whenever possible.
Capital credits are funds you, as a member, invest (through your monthly bill payment) in the cooperative for capital improvements to ensure system reliability and to meet the growth demands. Capital credits are based on the amount of electricity each member uses and vary from member to member and year to year.
A capital credit allocation is simply a record of your investment/ownership in the cooperative. Each year, any funds remaining after expenses have been paid (margins) are allocated to your capital credit account.
Distribution is the payout of capital credits to members. This typically happens in December. The PEC Board of Directors determines what portion of margins can be returned or distributed to members. Anyone who was a member in the previous year may receive a capital credit distribution.
Capital credit distributions are on an approximate 30-year rotation. The PEC Board may elect to pay distributions earlier than their 30-year rotation on a discounted basis. Active members may opt out of receiving a discounted amount when capital credits come up for distribution in advance of their 30-year rotation. Active members who elect not to receive a discounted amount on early payouts will receive the full amount when the balance comes up for payout in its 30-year cycle (for example, prior year distributions would be paid out approximately 30 years later if the member elects not to receive a discounted early payout).
A discounted distribution is capital credits paid to former cooperative members at a discounted value prior to the targeted 30-year rotation.
Electric utilities are capital-intensive businesses requiring large investments in equipment. PEC, like all businesses, must maintain a balance between debt and equity to ensure financial stability. Capital credits are a significant source of equity and help fund growth and maintenance of the system. By reinvesting your capital credits into the system, PEC can keep rates competitive by reducing the amount of money it must borrow from banks.
In December 2022, the PEC Board of Directors approved capital credits distributions totaling $6 million to current and former PEC members, raising our lifetime distribution to more than $146 million since 2007. Active PEC members who accumulated capital credits in 2021 and 1995 received a distribution as a bill credit in January 2023. Former members received a distribution in the form of a check.
Your discounted distribution will appear as a credit on your January 2023 bill. Former members with a current address on file will receive a check in the mail for their distribution amount.
You may opt out of receiving a discounted capital credits distribution during your time as an active member if you prefer to receive non-discounted credits in a future distribution, which we predict to be on a 30-year cycle.
Former members with a capital credits distribution totaling more than $10 will receive a check. Checks may be issued for distribution under $10 by request. Former members are encouraged to contact us to ensure their current address is on file. You may contact a member relations agent at 800-230-2207, Monday through Friday, 8 a.m. to 5 p.m.
When a member passes, the capital credits allocated to the account belong to the member’s estate. For an estate to receive a refund, a relative or representative must provide PEC with:
- Certified death certificate
- Legal document (Letters of Testamentary, Last Will and Testament) stating your position as executor/executrix
- PEC Affidavit of Heirship
Legal documents may be emailed to [email protected] or mailed to Pedernales Electric Cooperative, P.O. Box 1, Johnson City, TX 78636.
The capital credits specialist will go over the payout amounts with the executor/executrix or heir once legal documents are received.
Please contact member relations at [email protected] or 800-230-2207 for additional information and assistance.
Capital credits return money paid for electricity in a previous year and are generally not taxable income for residential customers unless the electric bills were deducted for tax purposes. Businesses may be subject to different IRS guidelines. Members should consult a tax professional for questions related to income tax filings. PEC does not provide legal, tax, or accounting advice and this information is provided as a courtesy only.
Do you have unclaimed funds?
The cooperative’s Capital Credits Policy serves as a guide for capital credits allocations and retirements. If you have questions about the capital credits allocated to your account, you can email us at [email protected] or call our capital credits line at 800-230-2207 Monday through Friday, between 8 a.m. and 5 p.m.
Please remember to include your name, account number, and the best phone number to reach you, and one of our member services agents will contact you after researching your account.