Capital Credits FAQs

Johnson County REMC is an electric cooperative owned by its members.  As owners, members are asked to help support their business.  Every business must maintain a suitable balance between debt and equity to ensure its financial health and stability.  Capital credits are one of the sources of equity for cooperatives.  Equity is used to help meet the expenses of the cooperative, such as to build and maintain electrical facilities and to repay debt.  A portion of this equity that is furnished by the members is returned at a later date.  Capital credits are refunded at the discretion of the Board of Directors when it is determined that the financial condition of the REMC will not be adversely affected by the distribution of these funds.

Capital Credit frequently asked questions:

How do Capital Credits work?

When will I be paid for my Capital Credits?

What happens to allocated Capital Credits if I am no longer a member of Johnson County REMC?

Is the Capital Credit check considered income and will I be taxed?

How are Capital Credits handled upon dissolution of marriage or death of a member?

What are unclaimed capital credits and do we owe you money?

 

Important capital credit forms:

Address Verification

Affidavit for payment of capital credit account of deceased person

 

How do Capital Credits work?

You need to know two things about Capital Credits to better understand how they work:

  1. Allocations:  When the cooperative has more revenue than expenses in a given year (referred to as a margin), the margin is distributed proportionately (allocated) to all members in the form of capital credits.   A record of the yearly allocation is permanently maintained in the member’s name.  These allocations are considered each member’s equity in the cooperative. The amount of capital credits a member earns is based on the amount of electricity purchased in a given year.
  2. Retirements:  This refers to capital credits that will be paid to you in the future.  The Board of Directors will determine what yearly allocations will be retired (paid back) to the members.  This retirement cycle, from allocation to retirement, will typically be 30 years.  The 30 year cycle reflects the average service life of electrical distribution plant and also the repayment term on debt that is incurred by REMC.

When will I be paid for my Capital Credits?

Capital credits are retired at the discretion of the Johnson County REMC Board of Directors.  The Board of Directors will review the financial health of the cooperative to ascertain that business requirements and other obligations have been met before a capital credits retirement is authorized.  Th prospect of retiring capital credits will be reviewed each year into the future.  As long as the financial condition of the cooperative remains strong, the Board expects to authorize retiring capital credits on a yearly basis.

What happens to allocated Capital Credits if I am no longer a member of Johnson County REMC?

When you discontinue service with Johnson County REMC, you are no longer a member and capital credit allocations will no longer accrue.  Records will be maintained in the former member’s name for the purpose of future retirements.  When and if the Johnson County REMC Board of Directors elects to retire (pay) capital credits in the future, the check is mailed to the last address on record.  It is the responsibility of the former member to maintain a current mailing address with Johnson County REMC.

Is the Capital Credit check considered income and will I be taxed?

In most cases, your capital credit check is not taxable unless electricity is claimed as a business expense.  We suggest that you consult with your tax advisor regarding the appropriate tax treatment of your individual capital credit check.

How are Capital Credits handled upon dissolution of marriage or death of a member?

Capital credits will remain in the name(s) of the original member(s) until Johnson County REMC is notified by a spouse, relative or other legal representative that the account may be re-assigned to another person or transferred to an estate.  Documentation will be required for Johnson County REMC to complete a request for capital credits to be re-assigned from the original member(s):

  • In the case of a member who is deceased:
  1. A death certificate or other sufficient proof of death will be required.
  2. A Will or a Letter of Administration that designates a legal representative of the estate.
  3. An Affidavit for payment of capital credits (provided by the cooperative).
  4. Photo ID of the representative (to include driver’s license, passport, or other gov’t issued ID).
  • For a member who is not deceased but needs personal appointment or representative:
  1. Guardianship papers
  2. Certified Power of Attorney papers
  3. Photo ID of the representative (to include driver’s license, passport, or other gov’t issued ID).

In the case of dissolution of marriage, the Cooperative must receive appropriate legal documentation as proof of the dissolution of marriage between spouses in order to make any changes in the ownership of the capital credits.  Otherwise, if the capital credits were associated with a joint membership, they will remain in both members’ names.  If the capital credits were associated with a single membership, the capital credits will remain in the original member’s name.

What are unclaimed capital credits and do we owe you money?

Unclaimed capital credits are retirements authorized by the Board of Directors but were not paid due to the inability to verify a current valid address.  If your name is on this list we need you to complete an Address Verification Form in order for us to process the check.  Please click on the link to view our list of unclaimed capital credit retirements.