Unlike investor-owned utility companies striving to generate profits for shareholders, electric cooperatives like REC operate on an at-cost basis. Any profits made by REC, referred to as margins are returned to our members. Capital credits represent these dividends. Capital credits are calculated each year in which REC makes a profit and distributed to each member in proportion to his/her electrical usage for the corresponding year. REC retains and uses capital credits for operating capital until the financial condition of the cooperative, determined by its banker, the National Rural Utilities Cooperative Finance Corporation (CFC), and REC’s Board of Trustees, permits the co-op to issue a refund.
When and how are capital credits returned?
Returning capital credits is a two-step process:
Step One: Allocation
First, an allocation determines each member's share of the cooperative's margin for a given year. Margins are allocated or assigned to members who purchased electricity from the cooperative during the year in which the margin was generated in proportion to the electrical sales for the year. Each member’s allocation is determined by his/her kilowatt-hour consumption for the year. The co-op keeps a permanent record of each member’s capital credit account, which is where the allocated amount remains until it is paid or "retired."
Step Two: Retirement
After reviewing the financial health of the cooperative, the Board of Trustees may declare a retirement, at which time all or part of each member's allocated amount is paid. REC uses a first-in, first-out method (FIFO), meaning earlier years are paid before later years.
What does REC do with capital credits not yet retired?
Capital credits are a significant source of equity for most electric cooperatives. Equity is used to help meet the operating expenses of the co-op, such as paying for new equipment to serve members and repaying debt.
What does REC do with unclaimed capital credits?
Sometimes, REC does not have a good address for a member and therefore does not mail a check. Other times, for whatever reason, a check will go uncashed. This money is considered "unclaimed." Once a year, REC updates a list of names associated wtih unclaimed capital credits on our website. Members on the list may complete the address verification form to provide a good address to claim their refunds. Checks are mailed only if the dollar value of the check is greater than $25, or if the customer's balance was lower than $25 but has no future allocations.
What happens to capital credits belonging to deceased members?
A rightful heir can complete a Certification of Entitlement form, which must be notarized, and provide the appropriate documentation to transfer the capital credits into his/her name.
If your name is on the list (click on Unclaimed Capital Credits, to view the list), please fill in the Capital Credits Request form (below), print, sign, attach a copy of your drivers license and mail to:
Rural Electric Cooperative, Attn. Capital Credits, PO Box 609, Lindsay, OK 73052
Capital Credit Forms (Adobe Reader(link is external) required)