What are capital credits?
Northern Plains Electric Cooperative is a member-owned, not-for-profit organization, meaning we operate at cost for the benefit of our members. When you establish service with Northern Plains Electric Cooperative, you become a member. At the beginning of every year, any excess revenues, or margins, from the previous year are allocated to our members and later paid out in the form of capital credits in proportion to their electrical usage. This means you, as a member/owner, benefit from any margins produced by the cooperative.
How are capital credits returned to you, the member?
STEP 1: ALLOCATION
An allocation determines your share of the cooperative's margins in a particular year. Any excess revenue (margins) remaining and approved of by the board of directors at the end of the year are allocated or assigned to your account as capital credits at the beginning of the following year based on the amount of energy you purchased during the previous year (patronage). Your account will accumulate capital credits each year you are an active member with us.
STEP 2: RETIREMENT
Once capital credits are allocated, they are retained by the co-op for a certain time. Capital credits are the most significant source of equity for the cooperative. Equity is used to help meet the expenses of the co-op, such as paying for new equipment to serve members and repaying debt. Capital credits help keep rates at an affordable level by reducing the amount of funds that must be borrowed to grow and maintain a cooperative's existing electric system.
Upon completion of the rotation period, the board of directors will review the cooperatives' financial health and can declare a retirement (your cash payment), and a portion of your capital credits are returned to you.
When are Capital Credits paid out?
General Retirement:
Every year, after reviewing the financial position of the cooperative, the Board of Directors may approve a retirement or payment of capital credits. If approved, the general retirement is processed in the fall of the year. Both active and inactive members will be issued a check if a current address is on file with the cooperative, and the amount of the retirement is greater than five dollars ($5.00).
Capital credits are retired using the FIFO (first-in, first-out) method which means allocations for the oldest years are paid out first. We are currently on a 15-year payout schedule.
Early Retirement:
Capital credits may be early retired if you have terminated electric service with Northern Plains and are no longer an active member with a monthly power bill. The board of directors offers a special buyout offer on your outstanding patronage capital balance in the Cooperative. Please contact our office at 800-882-2500 for further information.
Estate Retirement:
Family members (heirs) of a deceased member may be eligible to obtain a payout at the present value of the amount of capital credits on the deceased member’s account. Please contact our office at 800-882-2500 for further information.
Capital credits remain with the primary account holder. They will only be transferred or split between parties as listed in the divorce decree.
Please notify Northern Plains Electric Cooperative of your forwarding address to ensure you will receive any future checks mailed to you for any eligible capital credit retirements.
For inactive electric accounts, please contact our office in order that we may mail you an application for retirement of the deceased’s capital credits. The application will need to be completed and returned with a copy of the death certificate and other legal documentation depending on the status of the estate.
For active electric accounts, please contact our office for the account to be closed and/or transferred into another person/entity’s name. We will provide you with an application for retirement of the deceased member’s capital credits. The application will need to be completed and returned with a copy of the death certificate and other legal documentation depending on the status of the estate.
The list provided above have capital credit checks at Northern Plains Electric Cooperative for which we do not have a current address. Please notify us if you have a current address for any of these people, or if you are entitled to the capital credits in the case of an estate. Please contact our office at 800-882-2500 and ask for Tami.