What is patronage capital?
Carroll Electric operates as a not-for-profit electric cooperative under Section 501(c)(12) of the Internal Revenue Service (IRS) Code. As part of this not-for-profit status, the Cooperative allocates margins (profits) to each member in accordance with industry standards and in conformance with state and federal laws. Even as a "not-for-profit" organization, margins must be attained to ensure our lenders the Cooperative has the financial health to repay its loans. These allocated margins are more commonly referred to as patronage capital and are paid back to the membership as financial conditions permit.
How is patronage capital allocated?
Following an audit of the Cooperative's financial statements, patronage capital is allocated each year to the membership based on each member's proportional share of business with the Cooperative.
How does the Cooperative determine who receives patronage capital when it is retired?
The Cooperative currently retires patronage capital in the order it was allocated. This method is the most preferred among electric cooperatives and enables members who have had patronage capital outstanding the longest, see those credits returned in the shortest amount of time.
The most recent patronage capital retirement was mailed on February 15, 2019 totaling $3.7 million. Since its inception, Carroll Electric has retired over $47.4 million in patronage capital to its members.
A future patronage retirement has been declared by the board of directors to retire one-half of allocated patronage capital from 1993, totaling $3.12 million. This will be payable on February 15, 2021.
If I have multiple accounts will I receive multiple checks?
Patronage capital 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 associated with the retirement, you will receive one check for all three of your accounts.
What happens if I move?
If you move to another location within Carroll Electric's service area, your membership and patronage capital carries forward to your new account. If you move outside our area, you will no longer receive additional allocations. However, the balance of your patronage capital allocations are maintained until they are fully retired. You are encouraged to provide the Cooperative your current address to ensure future retirements and/or information concerning patronage capital is properly delivered to you.
Is patronage capital taxable?
Prevailing theories believe the allocation of patronage capital is not a taxable event for residential customers. However, we strongly recommend you seek advice from your tax professional for a specific opinion based on your set of facts.
What happens in the case of death?
In the case of death, patronage capital typically belongs to the member's estate. Because the settlement of each estate varies, we ask you to direct all patronage capital inquiries related to deceased members to the Accounting Department at our headquarters office, available by calling 800-432-9720.