Capital Credits are one of the biggest differences between electric cooperatives and other utilities. Instead of returning our annual margins (profits) to shareholders, as the for-profit utilities do, Union Power Cooperative and other electric cooperatives allocate this money back to our Members in the form of Capital Credits.
Operating Revenues
The amount you pay for electricity each month.
Money comes in each month from Members when they pay their electric bills. Included in each payment is your contribution to the day-to-day operating costs of the Cooperative.
Operating Expenses
The cost to maintain and deliver reliable electric service.
Money is then invested in equipment and manpower needed to meet the current and growing demand for electricity and improve and maintain the distribution system, minimizing the money that Union Power Cooperative needs to borrow. Members can think of it as their equity investment in the Cooperative.
Annual Margins
The margin after all expenses are paid (excess revenue).
Each year, excess revenue is divided proportionally among Cooperative Members based on their annual energy purchases. The Cooperative maintains Capital Credit accounts for each Member until the credits are retired (paid) in full.
Your Board of Directors reviews company finances, and when our financial condition permits, the Board may retire (pay) a portion of the Capital Credits to our Members based on their allocated share. All eligible active Members will receive a credit on their bill. All eligible former Members will receive a mailed check.
Allocations
Retirements
What’s the Difference Between Allocations and Retirements?
The difference between Allocations and Retirements can be confusing. Below, we break down each one.
Allocations
What
Excess margins are divided proportionally based on Member patronage (energy purchases) for the allocation year and added to each Member’s Capital Credit account.
Who
All Members that are active during the allocation year.
Where
An allocation factor is published so Members may multiply their total patronage during the allocation year – found on their bills – by the published factor, in order to calculate their Capital Credit allocation for the allocation year.
When
Allocations are processed once a year, typically in the spring, but no later than September 15th following the end of the allocation year.
Why
Allocations and Retirements are benefits of being a Union Power Cooperative Member.
Retirements
What
Because we are a cooperative, once operating costs, capital expansion, and system improvements have been covered, the Board of Directors may vote to retire (pay) excess revenue that have been previously allocated to the Members.
Who
All active or former Members who have remaining Capital Credits.
Where
All eligible active Members will receive a credit on their bill. All eligible former Members will receive a mailed check.
When
At the discretion of the Board of Directors, retirements (payments) are typically processed once a year and returned in the fall.
Why
Allocations and Retirements are benefits of being a Union Power Cooperative Member.
Capital Credits FAQ
As a Member of an electric cooperative, you invest in Union Power Cooperative through your patronage (energy purchases). Each year, any margin (excess revenue) earned by the Cooperative is reinvested in the cooperative. At the same time, the value of the margin is proportionally allocated (based on patronage) and recorded to Capital Credit accounts for each of our Members. These accounts are maintained until the credits are retired (paid) in full.
Capital Credits are allocated each year Union Power Cooperative has a net margin (excess revenue). This means the Capital Credits allocated from the previous year will be placed in a Cooperative-maintained account in each Member’s name where the allocation will stay until retired (paid).
The retirements (payments) are made at the discretion of the Board of Directors. Active Cooperative Members will receive retirements in the form of checks or bill credits. Former Members who have moved out of the service territory will receive checks at the last known forwarding address.
We take the total allocable margins for the year, excluding allocations of margins from our G&T (see What is the G&T Capital Credit Allocation? for more information), and divide it by the total patronage of all Members. Each Member's annual total patronage is multiplied by this number to determine their Co-op Capital Credit Allocation. In simple terms, the more electricity you buy, the more Capital Credits will be allocated to your account each year. And the longer you are a Member, the more allocations you will accumulate in the Cooperative-maintained account in your name.
North Carolina Electric Membership Corporation (“NCEMC”) is a generation and transmission (G&T) co-op owned by Union Power Cooperative and other electric cooperatives in North Carolina. Just as Union Power Cooperative allocates its margins to our Members, NCEMC allocates its margins to the electric cooperatives that own it. When Union Power Cooperative receives margin allocations from NCEMC, it allocates those margins to Union Power Cooperative Members, and the allocations are kept separate from the Co-op margin allocations. If at any point we receive payment from NCEMC to retire (pay) the G&T Allocations, we retire those allocations to our Members.
No. Your Capital Credits are allocated to an account maintained by Union Power Cooperative in your name. They provide the equity needed for the Cooperative to conduct business and meet our financial obligations. They become your property only once they have been retired and Union Power Cooperative will apply them to your bill at that time.
At the Union Power Cooperative Board of Directors’ discretion, Capital Credits are retired (paid) in part or in whole. The decision to retire is based on the financial outlook of the cooperative. Eligible active Members will receive a bill credit typically in the fall. Eligible former Members will receive a mailed check.
If you are an eligible former Member and need to update your current mailing address, please contact a Customer Service Representative at (704) 289-3145.
Once you terminate service, you become a former Member and will no longer receive additional Allocations. Your existing Capital Credit balance will be maintained in the same Capital Credit account in your name until it is retired (paid) in full. When the Board of Directors elects to retire (pay) Capital Credits in the future, a check will be mailed to the last forwarding address on record.
It is the former Member's responsibility to maintain a correct mailing address with Union Power Cooperative for the receipt of any future payments or information concerning Capital Credits. (Need to update your address? Please contact a Customer Service Representative at (704) 289-3145.)
If you receive a Capital Credits check that isn't yours, just write "Return to Sender" on the envelope and mail it back. Union Power Cooperative sends Capital Credit checks to the last known address and sometimes, a Member doesn't give us their new address, which could be outside our service territory.
When we get mail that's marked "Return to Sender" we will note their account so that we do not send future Capital Credit checks for that Member to your address. That's also why it's always important for Union Power Cooperative Members to give us an updated address, even if they're no longer going to be Members.
Members can reach out to a Customer Service Representative at (704) 289-3145. It can take up to 6 weeks for a check to be reissued.
For more information on your capital credits account, please contact our Customer Service Representatives at (704) 289-3145.
Questions?
Have questions about Capital Credits? Contact our Customer Service Representatives at (704) 289-3145.