Capital Credits

Capital Credits Overview

• Vigilante Electric Cooperative (VEC) tracks how much electricity you use and how much money you pay throughout the year.
• At the end of the year, VEC completes financial matters and determines whether there is excess revenue, called margins
• VEC allocates the margins to members as capital credits based on their contribution to margins.
• When VEC’s financial conditions permit, your Board of Trustees decides to retire (pay) the capital credits.
• Capital credits checks are applied to the accounts of qualifying VEC members.

All businesses need capital to operate, usually supplied by a combination of equity and debt. An electric cooperative like Vigilante Electric does not issue stock and pay dividends like an investor-owned utility would. However, we still need to maintain an adequate level of equity to ensure financial health and stability. For electric cooperatives, the most significant source of equity is the retention of margins from the sale of electricity to our members.

Capital Credits Facts

• Electric Cooperatives are non-profit organizations. After all financial commitments are met, any excess revenue is credited back to the membership.
• Our capital credits system was adopted at the 1947 annual meeting and provides a method for allocating each individual member’s share of net margins.
• The term “capital credits” is used because the actual money, classified as net margins, is invested in cooperative capital such as reserves or equipment.
  • This money belongs to the members, but they have agreed to its use for capital purposes by accepting the capital credits provisions in the bylaws.

Capital Credits Allocation

• A capital credits statement is sent to members annually notifying them of the allocation of margins for the previous year.
• When financial conditions permit, a general retirement (or refund) of capital can be made.
• These retired capital credits are then paid back to the individual member. It is our policy to retire the oldest capital credits first.

Unclaimed Capital Credits

A challenge of distributing retired capital credits is keeping track of every member we owe. If you do have capital credits and leave our system, please keep us informed of your current address. The link below has a list of the past members that we are seeking to contact.