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Capital Credit FAQ

Capital Credits

Frequently Asked Questions

 

WHAT ARE CAPITAL CREDITS?

When you sign up for an electric service from HCREMC, you become a member – and owner – of the cooperative. While investor-owned utilities return a portion of any profits (margins) back to their investors, electric cooperatives operate on a not-for-profit basis. So instead of returning profits (margins) to investors, REMC’s periodically retire capital credits.

 

WHERE DOES THE MONEY COME FROM?

Member-owned, not-for-profit electric utilities like Henry County REMC set rates to generate enough money to pay operating costs. At the end of each calendar year, we subtract operating expenses from the total amount of money collected during the year. The balance is called a "margin."

 

HOW ARE CAPITAL CREDITS ALLOCATED TO REMC MEMBERS?

Margins left over at the end of the year at a not-for-profit electric cooperative are allocated to the REMC members. Henry County REMC allocates margins to its members based on the quantity of kilowatt hours purchased. REMC keeps an accounting of each member’s share for each year.

 

WILL CAPITAL CREDITS BE REFUNDED EVERY YEAR?

Each year the Henry County REMC Board of Directors will make a decision on whether to retire capital credits and how much based on the financial health of the cooperative. Each year the Board of Directors will determine an amount to be designated in the yearly budget for the purpose of capital credit estate payments and general capital credit retirements.

 

HOW DO I CLAIM A CAPITAL CREDIT FOR AN ESTATE?

A specific procedure has been put in place to assist you in claiming a capital credit for an estate. You can stop by the office and pick up an application package, call to request a package be mailed to your home or print the necessary paperwork and instructions from our website.

 

WHO IS ELIGIBLE TO APPLY FOR CAPITAL CREDIT RETIREMENTS?

You must be a legal heir and provide the proper documentation requested through the application process. Refunds will be processed on a first come, first served basis until the year’s budget has been depleted. Those applications received after the budget has been depleted will be processed in the order they were received when the next year’s budget begins.

 

WILL HENRY COUNTY REMC BE REFUNDING CAPITAL CREDITS AT A DISCOUNTED AMOUNT?

Retention of Capital Credits is necessary to maintain an adequate financial position in any cooperative. Any refund of capital credits prior to 30 years will be discounted at a rate according to the current policy. Capital credits allocated more than 30 years ago will be refunded on a full “dollar for dollar” basis.

 

DOES HENRY COUNTY REMC HAVE A ROTATION CYCLE FOR GENERAL RETIREMENT OF CAPITAL CREDITS?

It is the goal of Henry County REMC to make general retirements of capital credits on a 30 year basis. Financial conditions will determine when REMC can begin general retirements.

 

IS THE CAPITAL CREDIT CHECK CONSIDERED INCOME AND WILL I BE TAXED?

In most cases, your capital credit check is not taxable unless electricity is claimed as a business expense. We suggest that you consult with your tax advisor regarding the appropriate tax treatment of your individual capital credit check.

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