Questions & Answers about capital credits

What are capital credits?
Capital credits are your share of the cooperative’s "profits".

How do capital credits work?
It’s important to know two things about capital credits in order to understand how they work for you:

1. Allocations: Each year, you are "allocated" your portion of the previous year's profit based on the amount of electricity you purchased from Wright-Hennepin in relation to the total amount of electricity purchased by all members during the year. This amount is put into a “holding account” for a number of years and used by Wright-Hennepin to fund capital needs for items such as power line construction, transformers, trucks, inventory and other equipment. This is an underlying principle of the cooperative business model and is one more way we keep your electric rates as low as possible. This "allocation" becomes your equity in the cooperative and is maintained in a separate account assigned to you.

2. Retirement: This is what you will get in cash at a later date. Wright-Hennepin uses the amount “allocated” to you for a time, but then returns this amount to members in the form of "retirements," which are actual "cash back" dollars to you.

When are capital credits returned to me?
Per cooperative bylaws, your locally elected Board of Directors determines the amount of retirement (cash back) each year, based on the financial condition of the cooperative and other considerations. These payments are usually made in December and appear as a credit on your electric statement. More than $22 million has been returned to Wright-Hennepin members over the years.

Do I receive capital credit allocations from Wright-Hennepin's wholesale power supplier?
Yes, Great River Energy (GRE), Wright-Hennepin’s wholesale power supplier also allocates its profits annually.

When GRE retires capital credits to its 28 distribution cooperatives, Wright-Hennepin returns them to members immediately. However, Wright-Hennepin has not received a capital credit retirement from GRE since 1999. As a result, Wright-Hennepin has not distributed capital credits from GRE to members during those years.

GRE is in a period of significant construction of power plants and transmission lines to meet your rapidly growing energy needs, and has deferred retiring capital credits until those large capital projects are further along. GRE's plan to retain capital credits reduces their need to borrow this same amount. In the end, this reduction in GRE's debt service contributes to better rate stability, which, our ongoing member research indicates is a high priority among Wright-Hennepin members (along with continuity and reliability of service).

Is my capital credit allocation taxable?
Typically, the allocation of capital credits is not taxable, but your “cash back” retirement of capital credits may be. You should seek the advice of your tax consultant for your situation.

A detailed summary of your capital credit account is available upon your request. Call 763-477-3051 or 1-800-943-2667 ext. 3051, or you may you may click here to send an e-mail request.