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Capital Credits Q&A

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

Allocated capital credits appear as an entry on the permanent financial records of the co-op and reflect your equity or ownership in SEC.  When capital credits are retired, a check is issued to you and your equity in the co-op is reduced.

How often will I receive an allocation notice?

You should receive an allocation notice annually after the accounting records from the previous year have been closed out and audited by the Cooperative’s independent public accounting firm.

How are capital credits calculated?

The amount of capital credits you earn in a given year is based upon the amount of capital you contribute to the co-op through payment of your monthly bills. The more electric service you buy, the greater your capital credits account – although the percentage will remain the same. The sum of your monthly bills for a year is multiplied by a percentage to determine your capital credits.

What do I have to do to start accumulating capital credits?

Capital credits are calculated by SEC for every member that purchased electricity during a year in which the utility earned margins.  No special action is required to start a capital credits account. Your membership activates your capital credits account.

Do I have to be a member for an entire year to earn capital credits?

No. Capital credits are calculated based upon a member’s patronage. If you are billed for service for even one month, you will accumulate some capital credits if SEC earned margins in that year.

What happens to the capital credits of a member that dies?

The capital credits of a deceased member may be paid at a discount without waiting for a general retirement. However, these estate payments are not automatic. A representative of the deceased member must contact SEC to initiate the process. If the membership is jointly held by a spouse, the estate will only be retired after both the member and spouse are deceased.

Will I receive a capital credit check every year?

Not necessarily. The Board of Directors must authorize a retirement before you receive a check. When considering a retirement, the Board analyzes the financial health of the association and will not authorize a retirement if SEC cannot afford it.

What happens to my capital credits when I leave the SEC service area?

They remain on the books in your name until they are retired. You should ensure that SEC has your current mailing address.