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Capital Credit Return and Equity Allocation

UPDATED 8/3/20

Shenandoah Valley Electric Cooperative members from 2019 will receive a boost after their Board of Directors voted July 30 to return more than $4 million in capital credits.

The return of funds, also known as a retirement, may be voted on for years in which a financial audit determines the cooperative’s revenues to have exceeded expenses. This is one of the key advantages to being a part of a member-owned electric cooperative.

“Returning capital credits is fundamental to the cooperative business model. It’s a sign of a well-run organization, which SVEC is and something our members and employees should be proud of,” Board Chair Larry C. Howdyshell says. “This year, more than any other in recent memory, it’s imperative that we work with our members who might be struggling financially. COVID-19 has had a significant impact on people around the Valley. I want to thank my fellow Board members for ensuring the financial stability of the organization, while recognizing the immediate needs of our members.”

The board returned more than $3.6 million in capital credits from SVEC and more than $400,000 through wholesale energy provider Old Dominion Electric Cooperative. For its approach to returning capital credits this year, the board sought to get dollars back to more members, and sooner. That meant members who received service from SVEC in 2019 are the ones receiving capital credits in 2020.

In recent years, the board employed a hybrid approach for returns, mixing the years in which capital credits were retired.

“Given the current hardships facing our members,” Howdyshell says, “we thought it was prudent to adopt a new strategy this year to help folks out. It’s our hope the timely return of capital credits can in some way relieve some of the pressure.”

A recent survey conducted among members in relation to SVEC’s response to COVID-19 showed that most respondents trusted co-op leaders to make the right decision in getting through current economic hardships.

Capital credit returns to members who received electric service in 2019 are scheduled to be dispersed beginning in August. Current members receive a bill credit, while anyone who no longer receives service is mailed a check.

Capital Credit Retirement FAQs (click here)

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.

We are happy to let you know that “Notices of Equity Allocation” were mailed recently to members who received electric service in 2019.

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 at svec.coop or call 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.