At the end of the year, KEC settles all financial matters and determines whether there are excess revenues, called net margins.
KEC allocates net margins as "capital credits" to members who belong to the co-op during the year in which a net margin is generated.
When KEC's financial conditions permit, the board of directors may decide to retire (pay) capital credits to members.
When KEC's board of directors retires capital credits, checks are mailed to members with a capital credits retirement of at least $5.
KEC has retired $15,790,000 to members.
A Benefit of Membership
Because electric co-ops operate at cost, any excess revenues - called net margins - are returned to members in the form of capital credits.
KEC's board of directors is committed to retiring capital credits. The allocation and retirement of capital credits is 1 of the most unique and rewarding benefits of being a Kay Electric member.
Since 2007, KEC's board has used a hybrid, first-in, first-out, and a last-in, first-out retirement method so the maximum number of members receive some return of investment. KEC is currently at a rotation of approximately 13 years.
Not all co-ops retire capital credits, and not all co-ops retire capital credits in a way that benefits the most members. It's 1 aspect of co-op membership that is unique to KEC.
The profits of KEC are allocated to our members every year. Allocation means the funds that you have invested into the cooperative are tracked, but not accessible in the form of cash. The actual distribution of funds, or retirement of capital credits, happens at the discretion of the board of directors.
At the end of each year, your board carefully assesses the financial condition of the cooperative, and determines what amount of capital credits to retire to our members. Capital credits may not be retired every year. If the board decides to retire capital credits, anyone who was a member in the year(s) being retired will receive some type of credit.
Electric utilities are capital intensive businesses requiring large investments in equipment. Like all businesses, KEC must maintain a balance between debt and equity to ensure financial stability. Capital credits are a significant source of equity and help to fund the growth and maintenance of the system.
During periods of fast growth, a large amount of cash (or equity) is needed to build our system. In order to fund this growth, KEC has to borrow money from banks, re-invest member capital, or in some cases, do both. By re-investing your capital credits, KEC is able to keep rates competitive by reducing the funds that must be borrowed from other sources.
If you move out of our service territory, please keep us informed of your new address so future checks will reach you. To report your current address for future capital credit refunds, please email or call KEC at (800) 535-1079 or (580) 363-1260.
If you have received a check issued to a deceased member or other incorrectly issued checks, please contact our Billing Department by email or call (800) 535-1079 or (580) 363-1260 to have the check re-issued. You may be required to provide proof of identity or legal documents to prove your representation to the estate or account.
Capital credits are a return of money paid for electricity in a previous year and are generally not taxable income for residential consumers—unless the electric bills were deducted for tax purposes. Businesses may be subject to different IRS guidelines. Members should consult a tax professional for questions related to income tax filings—Kay Electric does not provide legal, tax, or accounting advice and this information is provided as a courtesy.
