Capital Credits

FAQ
Woman looking at check

 

Capital Credits FAQ

What are Capital Credits?

Capital credits represent each member’s investment in the capital infrastructure of the cooperative. Capital credits are the margins credited (or allocated) to the members of the cooperative based on each member’s billing amounts for electric service from the cooperative. Salem Electric operates as a not-for-profit cooperative for the mutual benefit of all its members. Capital credits come from the net margins remaining after expenses are paid, and provides funds for new construction, plant replacements, debt reduction, and other capital purposes approved by the board of directors.

What is a capital credit allocation?

Each year, capital credit allocations are made for each Salem Electric member, based on their billing amount for electric service the previous year. An allocation is the amount designated to track the member’s investment in the cooperative. An allocation notice is mailed to members each spring, typically during the month of May.

Can I use my allocation to pay my bill?

No, allocated credits have no monetary value until the Board of Directors take action to retire a portion of the credits. 

What is a capital credit retirement?

A retirement is the amount you receive back as a capital credit refund. It is a portion of your total capital credit balance. The Board of Directors decide the portion to retire based on the financial condition of the cooperative. Generally, the Board of Directors review the retirement of capital credits in the fall.

When does Salem Electric refund capital credits?

Each year the Board of Directors determine whether the current financial condition of the cooperative allows for the distribution of capital credits. Currently, capital credits are retired by seniority after being held for approximately twenty years.

How will I receive my capital credit refunds?

When your credits become payable, a capital credit claim form will be mailed to you. You have the option to receive a check or have the credits applied to your current Salem Electric account.

What happens to my capital credits if I am no longer a member of Salem Electric?

Capital credits are not payable when you leave Salem Electric’s service because they are used for the capital needs of the cooperative until they are retired; however, when the credits are retired they become payable to you. To ensure swift payment of your credits, keep the cooperative informed of your current mailing address. 

What happens to the capital credits of a deceased member?

If a member should pass before their credits have been retired, the member’s heir can claim the credits by contacting Salem Electric. The member’s capital credit account will remain open until all of the credits have been retired.

Can I give my credits to someone else?

Yes, credits can be assigned (given) to another person or entity, or donated to the Salem Electric Member Assistance Program by completing the proper documentation.  

What happens to my credits if they are not claimed?

If credits are not claimed within four years after becoming payable, they will be forfeited through action by the Board of Directors and returned to Salem Electric.