Cooperative News

Check your July or August bills for capital credits allocations

Board approves more than $59M in allocations

At its July meeting, the PEC Board of Directors approved capital credits allocations totaling more than $59 million to current and former PEC members. If your account earned an allocation for electricity used during 2018, look for an allocation amount either on your July or August bill. The actual distribution of your capital credits will appear on your December bill.

What are capital credits?

At PEC, we’re more than just an electric provider and you’re more than just a customer. Our members are owners with a financial interest in the cooperative, and capital credits are one of several benefits unique to your membership. As a nonprofit cooperative owned by its members, when revenues exceed expenses, PEC doesn’t technically earn profits; instead, in cooperative terminology, it earns margins.

Each year, these margins are assigned to our members in proportion to the amount of electricity they are billed during that year. Capital credits reflect your ownership in PEC but are not immediately returned to you. We use capital credits to fund operating activities and reduce borrowing, with the intent of repaying them to you in later years.

What’s the difference between allocated and retired (returned) capital credits?

Allocated capital credits are the amount of cooperative earnings allocated to you based on the amount you contribute to the cooperative through payment of your monthly electric bills.

Retired capital credits represent a return of your capital credits allocated to you in prior years. The cooperative typically retires capital credits in December and the amount returned to you appears as a reduction in your electric bill and a reduction in your allocated capital credits balance. After reviewing the cooperative’s finances, the PEC Board of Directors determines the method, basis, priority, and timing of all capital credits retirements.

When will my capital credits be retired?

Because the capital is reinvested to support the cooperative’s operating activities, the entire balance you were allocated cannot be retired at once. Allocations act as a record of your ownership in the cooperative and are currently being distributed in-full on about a 30-year rotation. To the extent the PEC Board of Directors decides to return capital credits sooner than planned to the benefit of our membership, the capital credits will be retired at a discounted rate.

According to the cooperative’s current policy, each year a portion of capital credits will be retired to these five groups:

  1. The oldest outstanding year(s) that have not yet been retired.
  2. The most recent year(s) that have been allocated.
  3. All consumers that have been inactive for five years, upon request.
  4. The estates of deceased members, upon request.
  5. Consumers with a total distribution balance less than $10 on an inactive account, upon request.

Read our policy and learn more about capital credits.