Capital Credits - Money returned to the members
When you signed up to receive electricity from Oregon Trail Electric, you became a member - and an owner - of an electric cooperative. While investor-owned utilities return a portion of any profits back to their investors, electric cooperatives issue "capital credits" back to their member-owners.
At this time, OTEC has several "capital credits" issued in 2011 that have gone unclaimed. At this time we need your help in locating these members. Please search the Adobe PDF file below to find your name or someone you know. Any information you can give OTEC regarding the location of members on the unclaimed capital credits list would be greatly appreciated. Unclaimed capital credits may be waiting for you. If you see your name or recognize any of the names on this list, please contact your local OTEC office.
For a list of members who have not claimed their 2011 capital credits, click here
By joining Oregon Trail Electric Cooperative, you have become part owner in one of Oregon's largest nonprofit electric utilities. As an owner you enjoy certain rights - one of those rights includes the return of margins.
What are capital credits?
A cooperative does not earn profits in the sense that other businesses do. Instead, any margins, or revenues remaining after all expenses have been paid, are returned to the members in proportion to their usage of the co-op’s services through capital credit allocations and retirements. Capital credits represent each member’s share of the cooperative’s margins and ownership of the co-op.
Did OTEC return Capital Credits in 2011?
Yes. OTEC's Board of Directors determined that the cooperative was in a financial position to return $1.5 million in capital credits to its members. If a present member had $15 in capital credits, a check was mailed. Anything below $15.00 was credited to the December bill.
How much has OTEC returned in total in capital credits?
As of the 2011 allocation, OTEC will have returned a total of $21.2 million dollars to its members. The cooperative, which was started in 1988, has returned capital credits to its members for 17 consecutive years. Members will be notified in the winter of 2012 if there will be a 2012 allocation.
What do cooperatives do with capital credits?
Every business needs to maintain a suitable balance between debt and equity to ensure its financial health and stability. Capital credits are the most significant source of equity for most electric cooperatives. Equity is used to help meet the expenses of the co-op, such as paying for new equipment to serve members and repaying debt. Capital credits help keep rates at a competitive level by reducing the amount of funds that must be borrowed.
What do I have to do to start accumulating capital credits?
Capital credits are calculated by OTEC for everyone who purchased electricity during a year in which the utility earned margins. Your membership with OTEC activates your capital credit account.
How are capital credits calculated?
The amount of capital credits you earn in a given year is based upon the amount of revenue you contribute to the cooperative 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 revenue for a year is multiplied by a percentage to determine your capital credits.
How are capital credits disbursed?
Each year the Board of Directors determines whether the co-op’s financial position permits the return, or retirement, of capital credits and, if so, what amount of capital credits will be retired.
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 cooperative.
OTEC has a check minimum of $15.00. If the amount retired from your account is less than $15.00 it will be credited to you December bill if OTEC retires capital credits that year.
What happens to a member’s capital credits if the member moves away from the system?
A member who terminates service no longer accrues additional capital credit allocations. The balance in the member’s capital credit account is maintained until it is retired in full.
It is the former member’s responsibility to notify the co-op of any changes in address so the member can be located when it is time for the co-op to retire capital credits.
What happens to a member’s capital credits if the member dies?
Capital credits in the member’s account belong to the member’s estate. In order to assist the member’s heirs in closing the estate, OTEC offers a capital credit estate retirement of the outstanding balance of the deceased member’s capital credit account at a discounted rate. You must provide OTEC proof that you qualify legally as a representative for the estate.
Why are some capital credit retirements discounted?
Discounting estates reflects the net present value of making a capital credit retirement now that would otherwise be made at a later date. The smaller amount received today, if invested until the normal retirement date, would be equal to the normal retirement amount.
Does the member have to report capital credits on tax returns?
Capital credits are a return of money paid for electricity in a previous year and are generally not taxable income for residential consumers. Commercial and industrial consumers should discuss any capital credit retirements with their tax advisers.
