Capital Credits
The Best Kind of Mail: A Check
Rural electric cooperatives such as Anza Electric Cooperative Inc. (AEC) are different from investor-owned utilities (IOUs), whose primary objective is to make a profit. A rural electric cooperative is a nonprofit business that exists solely to provide its members with electricity.
Nonprofit electric cooperatives such as AEC deliver energy to their members at the cost of service. IOUs typically distribute their profits to investors across the nation or even the world—not necessarily to those they serve.
Capital credits come from the margins that the cooperative has left after paying all of its expenses in a given year. At the end of the year, that money is credited to each member’s capital credit account according to the amount of electricity the member purchased. A member with higher bills will earn more capital credits than a member with lower electric bills.
Since 1989, AEC has returned more than $6 million to its members. This year AEC is returning $500,000 to its present and former members for capital credits earned through 2008.
This retirement will represent 50% of any remaining balance from 1992 and a percentage of capital credits earned from 1993 through 2008. Amounts under $10 will be applied directly to the member’s electric energy account and will show as a credit on the August billing.
Look for your check in early August, and experience the cooperative difference.
Capital Credits
Capital credits are unique to cooperative utilities like Anza Electric Cooperative (AEC).Investor-owned power companies make profits and pay dividends to stockholders. Cooperatives, on the other hand, work on a non-profit basis and allocate their excess operating revenue back to their members.
Capital credits represent your share of the Cooperative's margins - margins are the operating revenue remaining after operating expenses. The amount assigned in your name depends on your energy purchases. To calculate this, we divide your annual energy purchase by the Cooperative's operating income for the year. The more electricity you buy, the more capital credits you earn.
Almost every year since 1989 the AEC board of directors has approved the retirement of capital credits. The decision to retire Capital Credits each year is made by the Board of Directors. The retirement amount varies and is based on the amount necessary to maintain financial soundness of the cooperative.
If you no longer have service with AEC and change your address, please contact the cooperative with the new information.
Capital Credit Estates
When a current or former member passes away, there are two options available with the member's capital credit account.
One option is for the member's beneficiaries to continue to receive a portion of the capital credit account balance each time capital credits are paid out. A percentage of each member's balance is generally paid out each year.
The advantage to leaving the account as is and receiving payments as they are made, is that the full balance or 100% of the account is paid.
The disadvantage is that it takes several years, likely 10 years or more, to pay out a capital credit account.
The second option and most common one is to settle the capital credit account. This means that the member's beneficiaries, with proper documentation, can receive 50% of the capital credit balance.
If an account was a joint account and one member has passed on, the deceased member's name is removed. Settlement of the capital credit account can only be made when both members have passed away.
Uncashed Capital Credit Checks
When capital credit checks are issued and then returned to AEC because of a bad address, the checks are voided and added back to the member/patron's account.
If the member contacts us and provides us with a current mailing address, a new check can be issued to cover these uncashed checks.
Please check our list under Find Lost Members. If you see a name you recognize and you know this person's address or phone number, please let us know. We will be happy to contact the individual for verification and send them a check.
If the name of a deceased member appears on our list and you know how to get in touch with their family or beneficiary, please let us know and we will be happy to contact them.
