Cooperative Principle #3: Members' Economic Participation
Kirk Collier, chief financial officer, explains how capital credits work
From margins to patronage capital to capital credits
The profits of a cooperative are called margins. Because TCEC is owned by its members, we allocate our margins to the membership in the form of patronage capital. The allocation amounts are based on a formula that considers the amount of revenue paid to the cooperative by the member. Patronage capital reduces the amount the cooperative has to borrow because TCEC retains and uses patronage capital for operating capital. It is used until the financial condition of the cooperative, determined by TCEC's board of trustees, permits the co-op to issue a refund in the form of capital credits.
Returning patronage capital 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. 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. When patronage capital is retired to the member, it becomes capital credits.
Claiming your retired capital credits
TCEC mails a check to members for capital credits. Even if the member has moved and is no longer a member of the cooperative, the capital credits remain in your account. Be sure to update your mailing address with TCEC if you move so we can send future capital credit checks to the correct address.
Members or former members on this list have been issued a capital credit check that was returned to the cooperative. For individuals on this list, we would like a current address to refund these capital credits. Please complete the unclaimed capital credits form.
For any deceased individuals listed, the personal representative for the estate has the option to obtain only retired capital credits and receive future retirements as they occur OR they can request the total allocated capital credits at a reduced present-day value, this option will pay the reduced balance owed and close the account. If the personal representative opts for the reduced amount, the request for early retirement of capital credits form will need to be completed.
If you have questions regarding capital credits or contact information for any individuals on the unclaimed list, please contact us at 580.652.2418.
Bylaws and Patronage Capital
Section 7.02 of the cooperative's Bylaws covers patronage capital. If you have questions about capital credits, contact us.