FAQs on Capital Credits

What are capital credits?

As a cooperative, Carroll Electric operates for the benefit of its members. Capital credits are just one of the benefits of the cooperative business model. Unlike investor-owned utilities which pay dividends to stockholders, cooperatives work on a nonprofit basis. However, the Cooperative’s mortgage requires the Cooperative must earn a margin sufficient to repay its debts and maintain its infrastructure. Capital credits simply represent this margin between the Cooperative’s revenues and expenses.

How is my allocation calculated?

Capital credits are allocated annually to each member based on each member’s proportional share of business with the Cooperative. This is based on each member’s usage during the year, expenses of the Cooperative, and the margins (revenues less expenses) of the Cooperative.

How often will I receive a check?

The retirement of capital credits to members is limited by state law, the Cooperative’s mortgage requirements, and the financing available for the improvement and expansion of the Cooperative’s delivery infrastructure. These are issues the board of directors considers each year.

Carroll Electric’s board of directors has unanimously approved the next retirements for the following dates:

August 16, 2013
February 20, 2015

Why did I not receive a check?

Capital credit retirements are made to the oldest balances first. The approximate life of the Cooperative’s infrastructure is 35 years. The last retirement checks were mailed February 17, 2012, which liquidated balances from 1985 and 1986. Only individuals who received service during that period received a check.

If I have multiple accounts will I receive multiple checks?

Capital credit retirements for a member who had service at more than one location are consolidated on one check. For example, if you had three separate accounts during the year of the retirement, you will receive one check for all three of your accounts.

What happens if I move?

If you move within Carroll Electric’s service area, your membership carries forward to your new account. If you move outside this area, you will no longer receive additional allocations. However, you are encouraged to provide the Cooperative your current address to ensure future payments and/or information concerning capital credits are properly delivered. These amounts are maintained in a capital account in your name until it is fully retired.

Are capital credits taxable?

Prevailing theories believe the allocation of capital credits is not a taxable event. These theories also believe the retirement of capital credits is taxable if the associated electric bill is a deductible expense for the taxpayer. You should seek advice of your tax professional for a specific opinion based on your set of facts.

What happens in the case of death?

Carroll Electric requires the following documentation from the executor or survivor to ensure capital credit retirements are issued appropriately:

1. A signed and notarized Affidavit and Indemnity Agreement (a form can be
obtained from Carroll Electric) and one of the following documents:

- The Letters Testamentary or Letters of Administration for the estate, or
- Trust documents (if the deceased member has an existing trust),

       2. Death certificate for the deceased member(s)

        3. Original check issued to the deceased member(s), if not previously
             cashed

        4. Copy of photo ID of executor or suvivor