What Are Capital Credits?
Capital Credits reflect the not-for-profit nature of our Cooperative. Capital Credits are actually the amount of money that is “credited” to a member’s account at the end of each year. This amount is based on revenue remaining after expenses have been paid. Investor-owned utilities return this margin (profit) to the stockholders through dividends. In the case of a member-owned non-profit cooperative, like Haywood EMC, the margin is credited to the member-owner on a pro rata basis as Capital Credits.
Capital Credits are allocated annually to each member based upon the amount of revenue received from members divided by the Cooperative’s margins. To determine an individual’s Capital Credit allocation, the margin (profit) percentage is applied to the amount they paid for electric service for the year. Once a year, Haywood EMC notifies our members of the percentage of margins to be allocated.
Haywood EMC retains these Capital Credits for 2 reasons:
- As working capital to keep the cooperative financially sound and to allow for emergencies such as storm damage.
- To retire debt and build equity in the cooperative
As capital Credits accumulate, the cooperative still retains the amount needed for financial strength but distributes an amount determined by the Board of Directors and within Rural Utility Service (RUS) regulations to its members in a general retirement of Capital Credits.
In addition, retirements are made to the estates of deceased members immediately at the present-day value of the total unretired allocated amount.
Need further Information on Capital Credits?
Contact Haywood EMC at (828) 452-2281 or (800) 951-6088.
Unclaimed Capital Credits
View our current list of unclaimed capital credits: Unclaimed Capital Credits List (PDF)
Capital Credits FAQs
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 member-owners in proportion to their usage of the co-op’s services through Capital Credits allocations and retirements. Capital Credits represent each member-owner’s share of the cooperative’s margins and ownership of the co-op.
Capital Credits are allocated to each member of the cooperative every year based on participation in the cooperative. The board of directors determines the basis for the allocation. The allocations are based on the total dollar amount of services purchased.
Not necessarily. The cooperative has established a retirement cycle, approximately 25 years for the retirement of Capital Credits.
In addition to the normal retirement cycle, Capital Credits of a deceased member are paid to the member’s estate.
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, the co-op offers a special Capital Credits retirement of the outstanding balance of the deceased member’s Capital Credits account at a discount. Contact Haywood EMC's Member Services for the forms needed.
A member who terminates service no longer receives additional Capital Credits allocations. The balance in the member’s Capital Credits account is maintained until it is retired in full.
It is the member’s responsibility to notify the co-op of any changes in address so that the member can be located when it is time for the co-op to retire Capital Credits allocated to the member’s account.
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 Credits retirements with their tax advisers.