Frequently Asked Questions About Capital Credits

Frequently Asked Questions About Capital Credits

Q: What are capital credits?
A: Capital credits are one of the many benefits of co-op membership. As a cost-of-service energy provider, Rock Energy doesn’t earn profits. Instead, co-ops use the term margins, which is any revenue remaining at the end of the year after all bills are paid. Capital credits reflect each member’s equity in, and contribution of capital to, the cooperative. This differs from dividends that investor-owned utilities pay shareholders, who may or may not receive service from the utility.
 
Q: Where does the money come from?
A: Co-ops set rates to generate enough money to pay operating costs, make payments on any loans, and provide an emergency reserve. At the end of each year, we subtract operating expenses from the operating revenue collected during the year. The balance is called an operating margin.
 
Q: What’s the difference between allocation and retirement?
A: An allocation is your share of the margins. We set this money aside to use as operating capital for improvements and maintenance. A retirement is the amount you receive as a credit on your statement. It is a percentage of your allocations accumulated over the years. Typically, after utilizing capital for 20 to 30 years, it is retired.
 
Q: Why does the cooperative need to accumulate equity?
A: Your equity in the co-op reduces the need for us to raise rates or borrow money to meet expenses.
 
Q: Are capital credits retired every year?
A: Each year, your board of directors decides whether to retire capital credits based on the co-op’s financial health. Rock Energy’s ability to retire capital credits reflects the cooperative’s strength and financial stability.
 
Q: What happens to my capital credits if I move?
A: Your capital credits remain on our books until they are retired. That’s why it’s important to let us know of any address changes. This year we issued checks totaling more than $200,000 to past members.
 
Q: What happens to the capital credits of a member that dies?
A: A deceased member’s capital credits may be paid at a discount without waiting for a general retirement. A representative of the estate must contact us.
 
Q: What happens to unclaimed capital credits?
A: We do everything we can to ensure that former members get their retired capital credits. Each fall we publish a list of unclaimed capital credits. Any money that isn’t claimed is placed in the Wisconsin Electric Cooperatives’ Federated Youth Foundation and used for educational purposes, including scholarships and youth programs in both Wisconsin and Illinois.