The word “margins” means something different to a cooperative member.
As a cooperative, Wiregrass Electric does not earn profits like private corporations. Instead, WEC is member-owned, and members are entitled to a share of the margins earned by selling electric services. WEC refers to these margins as capital credits or patronage capital, and they reflect each member’s ownership in their electric cooperative.
WEC tracks how much each member pays into their cooperative through the purchase of electricity. Each year, the Board of Trustees examines the cooperative’s financial stability, including the investment needed for wholesale purchased power, power poles, equipment and much more.
Sometimes the cooperative will have a small margin of unspent funds at the end the fiscal year. The cooperative uses this money to help finance the operations of the cooperative, to ensure the cooperative can fulfill its mission of providing reliable, low cost power. After a set amount of time, WEC retires its margins and issues a capital credit.
To date, WEC has retired more than $7 million in capital credit refunds. Each year, the cooperative does its best to deliver these credits to the member, even if they have since left the cooperative’s service territory. Advertisements are made for those who cannot be reached to claim their capital credit as soon as possible.
“Capital credits are a benefit of participating in a not-for-profit cooperative,” says Les Moreland , CEO of WEC. “Here, each member is also a partial owner, and we answer to our members. Sometimes a power company will answer to a board of directors who live hundreds of miles away. At WEC, we’re accountable to our neighbors. And I believe that’s what makes this cooperative strive to do its best every day.”
How do I claim a capital credits?
You will need some documentation in order to claim a check:
- You must provide a valid driver’s license or state ID if you are the member of record.
- If the member of record is deceased, you must provide a death certificate plus one of the following:
- Letters of Administration, or
- Letters of Testamentary, or
- If you do not have item 1 or 2, please provide evidence that you are the legal and authorized representative of the estate.
This information must be presented at WEC’s Hartford office located at 509 N. State Highway 167 in Hartford.
If you have any questions, please contact us at 1-800-239-4602.
A message from Wiregrass CEO Les Moreland on Capital Credits
“An electric cooperative is a special type of business. In October, we are celebrating our 75th anniversary. That means that 75 years ago, the people of this region came together and resolved to pool their resources to bring electricity to the Wiregrass region.
Back 75 years ago, not one for-profit company considered it. In the cities, you have plenty of meters for every mile of electric line strung up. Here, in the rural areas, things were different. There could be miles between homes and no profit to be had. So, Wiregrass Electric Cooperative was born and our mission then is the same as it is now: to bring affordable, reliable electricity to our members.
Like 75 years ago, we are still a not-for-profit utility. WEC provides electric service at cost. Those costs fall into two categories: building and maintaining 3,000 miles of electric infrastructure, and purchasing electricity to distribute to our members (wholesale power).
To accomplish this, WEC does have to collect more money than it spends each year. We call these numbers margins, and we pay this money back to our members every year as “capital credits” or “patronage capital.” WEC has assigned and paid more than $50 million in capital credits the last 75 years. We retire these capital credits on a first in-first out cycle. We have retired nearly $4 million this way in the last 9 years.
That means if you purchase electricity from WEC, you receive capital credits from WEC every year. It’s important to explain why your cooperative, and approximately 850 other electric cooperatives across the nation, operate this way. We do not retire capital credits the year in which a member earns and is paid capital credits because it would drastically increase each member’s price of electricity.
As a cooperative, we have two sources of income: the rates we charge our members, and through borrowing money. We are fortunate to have an excellent partner who we can turn to when we need to borrow money: the Rural Utilities Service. They provide low-interest loans to not-for-profit cooperatives across the country to help us better serve our members. This is how our founders 75 years ago were able to come together and purchase the equipment needed to bring electricity to our communities in the Wiregrass region.
The RUS has standards for how cooperatives must operate in order to receive these loans, much like any bank. One important standard is the amount of equity we must have on hand. For WEC to borrow money, we are expected to have a certain amount of equity. Without being able to retain margins for a certain amount of time, we would be forced to turn to our only other source of income: our members. We are able to meet our goal of providing the most cost-effective service possible for every member because of this relationship with RUS. Your board and management team strive to retire capital credits as quickly as possible, and are always looking for ways to financially strengthen your cooperative.
In addition, current year margins are returned (when available) using our Wholesale Power Cost Adjustment (WPCA) credit, which has allowed your cooperative to refund nearly $5 million back to our members since 2010. Each member of this cooperative is an owner, and I hope everyone takes pride in what we have accomplished over the last 75 years.
One of the ways we’ve been able to accomplish so much and remain a community focused, not-for-profit company is the way we handle both capital credits and Wholesale Power cost credits. I also want to say that if any of our members are concerned about capital credits, or the way their cooperative handles them, my door is always open. Thank you for reading.”