When you signed up to receive electric service from South Central Indiana REMC, you became a member and an owner of an electric cooperative. While investor-owned utilities return profits back to their investors, electric cooperatives give margins back to the member-owners in the form of “capital credits.”
Capital Credit Allocation
You might have seen a note on your bill about capital credit allocation.
- This notification is just to let you know your share of the year margins
- It is for information purposes only
- No action needs to be taken
- It is not a credit on your bill, nor is it a notification that we will be paying back any capital credits this year
Why do we send you this information?
- Because capital credits are one of the benefits of being a cooperative member-owner
Allocation & Retirement
There are 2 processes for capital credits: allocation and retirement:
Allocation
- Allocation is taking the margins from the prior year and dividing it between all the members who purchased electricity that year
- (Margins are what other companies usually consider profit)
- We are required to notify members each year of what was allocated to them
- Every year, a note is made on each member’s account of how much of the capital credits are allocated to them for that year
- This process is done for record-keeping purposes only; no money changes hands at this point
Retirement
- Retirement is paying back the capital credits that were assigned to members during a previous allocation process
- Each year, the board of directors determines if we are able to pay back capital credits and which years we will be paying back
- Note: We should have an allocation every year, but we may or may not have a retirement
Is Your Address Up-To-Date?
- Please make sure to keep your mailing address up-to-date, even if you no longer receive electric service from SCI REMC, so that you will receive any future capital credit retirements
Capital Credits – The Cooperative Difference Video
Capital Credit Frequently Asked Questions
South Central Indiana REMC is a not-for-profit, member-owned cooperative. Capital credits are what set Cooperatives apart from Investor-Owned Utilities (IOUs). While IOUs try to earn profits to give back to their investors, Cooperatives work hard to provide their electric service as close to cost as possible. Any margins, revenues fewer expenses at the end of the year are allocated to our Member-Owners in the form of Capital Credits.
Annually the Board of Directors evaluates the financial position of the Cooperative and determines whether to pay back capital credits. Then the Board determines which Capital Credits from what year(s) will be refunded.
Nothing. By purchasing electricity from SCI REMC, you are automatically considered a member, and an owner, of the Cooperative. At the end of the year, margins are allocated to each member that purchased electricity that year proportionately based on their electric purchases. SCI REMC keeps a record of capital credits for each member for each year to be paid back at a later date. Annually the Board of Directors evaluates the financial position of the Cooperative and determines whether to pay back capital credits. Then the board determines what years, if any, will receive a capital credit refund that year.
Yes! You will be entitled to Capital Credits earned while you were a member even after moving off our lines. It is important that you always provide us with your current mailing address.
We work to give capital credits to both long-term members and newer members. Capital Credits from Operating Margins have been paid back for the years 1939 to 1982 and 1994 to 2016. A portion of the capital credits from Operating Margins for 1983 to 1988 and 2017 have also been paid back. Since 2002, we have paid more than $5 million in Capital Credits to members.
Operating Costs: The cost to maintain, repair, and construct the electric system (poles, wires, substations, etc).
Margin: At the end of the year, SCI REMC subtracts operating expenses from the amount of money collected, and the balance is called the margin. (This is similar to “profits” at IOUs.)
Allocate/Allocation: An approved method used to assign the margins to an individual’s capital credit account.
Patronage: At the cooperative, your patronage is the amount of money you paid on your electric bill each year.
Retire/Retirement: The process of paying back the capital credits to members. The amount paid back is determined by what years of capital credits are being retired and the capital credits allocated to the member for that year. Capital credits are paid back by check or bill credit.
If you have additional questions about capital credits, please email us.