Capital credits 101
Posted by Jeph Novak on December 15, 2021
So, what exactly are capital credits? Who gets them, and how are they calculated? These are common questions for new and long-tenured members of Wright-Hennepin (WH), and we are here to answer them!
What are capital credits?
Capital credits are the money, or margin, that is left over after all bills associated with doing business have been paid. Each member is entitled to these capital credits, or a share of the refund, based on electricity purchased. Before returning capital credits, WH uses the capital to offset the cost of debt for the construction and maintenance of the electric distribution system.
At the end of each year, WH determines if there are any excess margins, to be allocated or assigned back to the members in the form of capital credits. Along with WH’s capital credits, members also receive allocations from WH’s Power Suppliers: Great River Energy (GRE) located in Maple Grove, MN, and Basin Electric Power Cooperative (Basin) located in Bismarck, ND.
How are capital credits calculated?
The amount of the member’s capital credit allocation is based on electric purchases during that year.
Who gets them? How are they distributed?
Per the cooperative’s bylaws, WH’s member-elected board determines the dollar value of the margins to be retired based on the cooperative’s financial condition and other considerations each year. WH is currently on a 21-year rotation cycle. Members of WH who purchased electricity during the years being retired are eligible for capital credit refunds. For example, in 2021, members allocated amounts from 2000, 2001 or 2020 received a refund. If the refund was $10 or greater, members received a check in the mail (unless the member opted to receive a bill credit). Those whose refund was between $1.00 and $9.99 automatically received a bill credit.
GRE and Basin’s capital credit allocations are returned to the member when they have decided to retire their portion of the members allocations. For example, in 2021, members who purchased energy from 1985 – 1991 were eligible for GRE capital credits.
What’s the difference between “allocated” and “retired” capital credits?
Allocated capital credits appear as an entry on the permanent financial records of the cooperative for each member of WH. When the Board of Directors approve retiring capital credits, money is given back to those who were members during the time frame being retired.
What if I leave the co-op?
Members leaving WH will receive a special retirement of their WH capital credits, payable on a discounted basis, on their final bill. Acceptance of the refund constitutes the final settlement of WH’s capital credits. Former members have 60 days from their final bill to contact WH to exercise their option to receive retirements on the current rotation. GRE and Basin allocated capital credits will be retired when payment is received from the power supplier.
To help ensure you receive future capital credit refunds, it is important to keep your contact information up-to-date if you move and are no longer a member.
What happens to unclaimed capital credits?
After a period of time, a portion of unclaimed capital credits are contributed towards scholarship funds, which directly benefit the children of current WH members. Members can also claim their capital credits on WH’s website.
What happens if a member passes away?
Heirs/beneficiaries of a deceased cooperative member should contact a capital credit representative at (763) 477-3000 to find out about our process for estate requests. Estate payouts cannot be processed using the unclaimed property form.
