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Capital Credit Return and Equity Allocation

UPDATED 7/9/21

SVEC members will receive a financial boost after their Board of Directors voted to return more than $5.5 million in capital credits.

Such a return may occur for years in which a financial audit determines the cooperative’s revenues exceed expenses. Also referred to as a capital credit retirement, this is one of the key advantages to being a part of a member-owned electric cooperative.

“Any excess revenues generated by the cooperative go back to members. We’re hopeful this provides some relief for those who have faced financial hardship from the pandemic,” Board Chair Dr. Conrad Helsley says. “SVEC provides an essential service. While that most notably means keeping members’ lights on, it cannot be done without sound business practices and financial management behind the scenes. It is through those efforts that we can retire capital credits and truly live out the principles of being a cooperative.”

In retiring over $5.5 million, the board voted for half of the total to be returned to SVEC members who received service in 2020. The remainder is returned to members who received service in 2002 and 2003.

Under the cooperative business model, it’s customary for SVEC to hold capital credits as equity in member accounts for an extended period. This allows SVEC to fund capital projects and unplanned expenses over time. Once those financial obligations are met, the board may then vote to return funds.

Capital credit returns are scheduled to be dispersed beginning the second week of July. Current members receive a bill credit, while anyone who no longer receives electric service from SVEC is mailed a check. Those who have moved out of the SVEC service area are encouraged to notify the cooperative of any address changes to ensure future capital credit checks are mailed to them.

Do You Have Unclaimed Credits? (click here)

Previous: Notice of Equity Allocation

In May, the SVEC board of directors approved the annual allocation of cooperative equity into members’ accounts. The equity allocation is simply a record of your ownership in the cooperative, based on the amount of electricity you paid for in the previous year. When SVEC has remaining revenues (called margins) after an audit confirms that all proper expenses are satisfied for a given year, the board will allocate the margins as equity to member accounts.

The cooperative uses these funds as operating capital for investments such as system reliability improvements and maintenance. These monies, over time, are then returned to members as what’s called capital credits.

Getting Credits Back to You

Following the allocation of margins to members, when financial conditions of the cooperative permit, the board of directors may then decide to return a portion of capital credits from your account. This is done in the form of a check for former members or a bill credit to current ones, and typically is decided in the board meeting in the month following margin allocation.

Remember that capital credit equity that is held in your membership account is used for reliability improvements and maintenance. These are long-term investments. Capital credits cannot be refunded all at once because they help the cooperative remain financially sound, ensuring a stable, reliable electric provider for the benefit of the members we serve.

As always, we are here to serve our members and help guide you through the capital credit return process. You may view the technical details of how the equity allocation and capital credit processes work in SVEC’s bylaws online here or by calling SVEC at 1-800-234-7832.

If you have an address change, please keep the cooperative informed so SVEC may issue your capital credits retirement in the future when approved by the board.