Capital Credits

Co-op members receive a check back from Central Electric Cooperative.

Central Electric Cooperative, Inc. is a member owned company. As such it is non-profit, meaning the cooperative’s main goal is to provide reliable energy and service at a good value, not to make money. Anyone who uses, receives or purchases electric energy is a member.

What are Capital Credits?

As a nonprofit cooperative, after Central Electric deducts costs and upkeep for yearly operations the net profit is reinvested into the company to provide cash flow, collateral to show stability and to obtain loans. Any net profit over those costs is allocated back to our members in the form of capital credits.

Every member of Central Electric has shares in capital credits. The more electricity you buy and the longer you use the service, the more monetary equity (allocations) you accumulate. Allocations are the total sum of annual equity accrued by the member during their prior year of service. Each summer members receive notification of capital credits acquired the previous year. In a fall meeting the board determines if a percentage will be paid out and if so what amount it will be. The Central Electric Board of Directors makes the decision as to what percentage of capital credits will be paid out in a given year based on the financial condition of the cooperative. If Central Electric incurred additional costs for repairs due to storms, putting in underground cable, upgrading equipment etc. the board may decide to forgo retiring capital credits that year. When the decision is made to pay a percentage, checks are issued and mailed to members in November.

Am I eligible to receive capital credit checks?

As either a current member or a former member of Central Electric Cooperative, you are entitled to receive a dividend. Checks will be issued to the member whose name the account is in.

Why aren’t the allocations paid out all at one time?

Central Electric needs to maintain adequate cash flow, collateral to show stability to obtain loans & allocated towards capital credits for its members because if the business showed no margin /profit Central Electric would be unstable and unable to build, improve or maintain its electric system.

Is there any reason that I would not receive a capital credit check?

The only time a member would not receive the capital credits allocated to them would be if they had a bad debt at Central Electric including any reasonable interest and late fees resulting from that debt. In this case Central Electric would deduct what is owed to the coop and the rest of the capital credits, if any, would be refunded at the current refund schedule.

What do I need to do if I move to keep receiving capital credit checks?

To receive your capital credit check once you leave our service, it is important to keep us informed of you current address. Many checks go unclaimed each year because we are unable to locate previous members.

What do I need to do to see if I have any unclaimed capital credit checks?

Every year in Central Electric’s newsletter there is a list of all unclaimed capital credit checks. If you think that you may have any unclaimed capital credit checks, please call our office at 800.477.2892 or use the form available in the contact us section of this site. Please include your name, current address and phone number in your correspondence.

What happens if a member passes away?

If a member passes away his/her spouse or representative may do one of two things. They may have the capital credits put into an estate account which will continue to refund capital credits at the same rate as before the members death. Or Central Electric will provide forms to be filled out for an early retirement. However, with an early refund, which can only be done in the event of death of a member, the full amount will not be received. The amount of the early retirement will be discounted based on a formula called "present value calculation" used to determine the amount refunded by calculating what the value of those capital credits would be in coming years if the account were left to be paid out at the normal schedule.

In the case of a joint partnership, if one partner passes away the capital credits revert to the surviving partner. If a partnership is dissolved and Central Electric is not instructed otherwise, one-half of the capital credits previously allocated to the joint membership, are re-allocated and re-credited to each joint member.

Do I have to report the allocations or capital credit checks as income?

The best advice we can give you is to contact your tax preparer. He or she is the expert.

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M - F // 8:00am - 5:00pm1420 N. Main Mitchell, SD 57301 // 800.477.2892 // cec@centralec.coop