You’re a member, you’re an owner: Capital Credits

Each year, a list of members who have had their capital credits checks returned to us is published in the August edition of Carolina Country, your member magazine.  For an archive of past Carolina Country magazines, click here.

Residential Capital Credit list of monies to be escheated if not claimed.
Business Capital Credit list of monies to be escheated if not claimed.
Click here to see if you are owed any unclaimed capital credits. If you are owed unclaimed capital credits or cannot open this list, please call 1.800.474.6300 or 1.919.863.6300.


What are capital credits?

A cooperative does not earn profits in the sense that other businesses do.  Instead, any margins, or revenues remaining after all expenses have been paid, are returned to the members in proportion to their usage 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.

What do cooperatives do with capital credits?

Every business needs to maintain a suitable balance between debt and equity to ensure its financial health and stability.  Capital credits are the most significant source of equity for most electric cooperatives.  Equity is used to help meet the expenses of the co-op, such as paying for new equipment to serve members and repaying debt.  Capital credits help keep rates at a competitive level by reducing the amount of funds that must be borrowed.

What do I have to do to start accumulating capital credits?

Capital credits are calculated by Wake Electric for everyone who purchased electricity during a year in which the utility earned margins.  Your membership with Wake Electric activates your capital credit account.

How are capital credits calculated?

The amount of capital credits you earn in a given year is based upon the amount of revenue you contribute to the cooperative through payment of your monthly bills.  The more electric service you buy the greater your capital credits account – although the percentage will remain the same.  The sum of your revenue for a year is multiplied by a percentage to determine your capital credits.

How are capital credits disbursed?

Each year the Board of Directors determines whether the co-op’s financial position permits the return, or retirement, of capital credits and, if so, what amount of capital credits will be retired.

Will I receive a capital credit check every year?

Not necessarily.  The Board of Directors must authorize a retirement before you receive a check.  When considering a retirement the Board analyzes the financial health of the cooperative.

Wake Electric has a check minimum of $25.00.  If the amount retired from your account is less than $25.00 it will remain on your account until the amount accumulates greater than our check minimum and a check will be issued at that time.

What happens to a member’s capital credits if the member moves away from the system?

A member who terminates service no longer receives additional capital credit allocations.  The balance in the member’s capital credit account is maintained until it is retired in full.

It is the former member’s responsibility to notify the co-op of any changes in address so the member can be located when it is time for the co-op to retire capital credits.  A check will be issued to the last address on file and if it is returned or not cashed it will be considered as unclaimed property and all future retirements will be treated as unclaimed property until a valid address is received or the account is retired in full.

What happens to a member’s capital credits if the member dies?

Capital credits in the member’s account belong to the member’s estate.  In order to assist the member’s heirs in closing the estate, Wake Electric offers a capital credit estate retirement of the outstanding balance of the deceased member’s capital credit account at a discount.  You must provide Wake Electric proof that you qualify legally as a representative for the estate.

Why are some capital credit retirements discounted?

Discounting estates reflects the net present value of making a capital credit retirement now that would otherwise be made at a later date.  The smaller amount received today, if invested until the normal retirement date, would be equal to the normal retirement amount.

Does the member have to report capital credits on tax returns?

Capital credits are a return of money paid for electricity in a previous year and are generally not taxable income for residential consumers.  Commercial and industrial consumers should discuss any capital credit retirements with their tax advisers.

For more information on Capital Credits, call 1.800.474.6300 or or 1.919.863.6300 or email: information@wemc.com.