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Capital Credits

A cooperative does not earn profits in the way other businesses do, including investor-owned and municipal utilities. Instead, any margins, or revenues remaining after all expenses have been paid are returned to the members in proportion to their use of the co-op’s services through capital credit allocations and retirements. Capital credits represent each member’s share of the cooperative’s margins and ownership of the co-op.

Dubois REC, Inc. will be paying those who were members on our system in the year 1982-83.

Need more info about capital credits?

What’s the difference between allocated and retired capital credits?

Allocated capital credits appear as an entry on the permanent financial records of the co-op and reflect your equity or ownership in Dubois REC. When capital credits are retired, a check is issued to you and your equity in the co-op is reduced.

How often will I receive an allocation notice?

Dubois REC prints an allocation notice annually in the Indiana Connection, member magazine, after the finances for the previous year have been completed.

How do I start accumulating capital credits?

Capital credits are calculated by Dubois REC for everyone who purchases electricity during a year in which the utility earned margins. No special action is required to start a capital credits account. Membership with Dubois REC activates a capital credits account.

What percent of electric bills is returned as capital credits?

The percentage of the total payment that is allocated as capital credits varies from year to year, depending on the success of the cooperative. Capital credits are only allocated for a year in which Dubois REC earns margins. Since capital credits are a member’s share of the margins, no credits are allocated for a year with no margins.

How are capital credits calculated?

The amount of capital credits you earn in a given year is based upon the amount of capital you contribute to the co-op through payment of your monthly bills. The more electric service you buy, the greater your capital credits account. The sum of your monthly bills for a year is multiplied by a percentage to determine your capital credits.

Here’s how to figure your share for the total $2,218,558 margin for 2016: For every dollar you paid Dubois REC for electric service in 2016, roughly 7 cents has been allocated to your capital credit account.

For example, a member who paid the co-op $1,000 over the course of the year for electricity and security light service would have $70 allocated to his capital credit account for the year 2016.

To calculate your own capital credit allocation for 2016, total the dollars paid for electricity and security light service. Exclude any other payments or charges, such as taxes, late fees, or Operation Round Up contributions. Multiply the result by 7 cents or .0704.

Does someone have to be a member for an entire year to earn capital credits?

No. Capital credits are calculated based upon a members’ monthly bills. If a member is billed for electricity for even one month, they will accumulate some capital credits, if Dubois REC earned margins in that year.

Will members receive a capital credits check every year?

Not necessarily. The Board of Directors must authorize a retirement before members receive a check. When considering a retirement, the Board analyzes the financial health of the cooperative and will not authorize a retirement if Dubois REC cannot afford it. Checks will also only be issued for amounts of $10 or more. Smaller amounts will continue to accrue until the next time capital credits are retired. If it is the final payment, then the check will be issued regardless of the dollar amount.

What happens to capital credits when a member leaves the Dubois REC service area?

Capital credits allocations remain on the books in a member’s name and member number until they are retired. If a member moves or no longer has electric service with Dubois REC, the member should keep their current address on file with the cooperative, so that future disbursements can be processed and forwarded to them.

What happens to the capital credits of a member who dies?

The capital credits of a deceased member may be paid without waiting for a general retirement. However, these estate payments are not automatic. A representative of the estate must request the capital credits by contacting the Dubois REC office for the proper forms.

In order to maintain financial stability and to be fair to all members, the cooperative reduces the amount of the estate capital credits withdrawn early to reflect the time value of money.

Administrators can choose to receive capital credits at the scheduled retirement date with no reduction.

The reason for discounting the capital credits is that they are being taken from the cooperative’s operating capital, and if this were performed routinely, the cooperative would need to borrow additional money or raise member rates to secure the necessary operating capital.

Did you know you could use your Capital Credit refund to help the community?

Call the Dubois REC office at 812-482-5454 and ask about donating your Capital Credit refund to Operation Round Up.