Capital Credits

How it Works:

When a Cooperative’s revenues are greater than its expenses in a given year, it results in income we refer to as Margins. Each member’s share in these margins are referred to as Capital Credits. A members share or allocation of these Capital Credits is based upon the amount of electricity used in a specified year in relation to the electric usage of all members at that time. The Cooperative retains these Capital Credits for use as working capital for a period of time, then they are paid back to individual members in the form of a General Retirement of Capital Credits.

The amount of capital credits you earn in a given year is based upon the amount of capital you contribute to the cooperative through payment of your monthly bills. The more electric service you buy in relation to all members, the greater your share of capital credits will be for the year. The sum of your monthly bills for a year is multiplied by your share percentage to determine your capital credits allocation.

Capital credit allocations are pooled together and used as working capital so that we can serve our members. These funds pay for power reliability improvements and maintenance such as replacing power lines and keeping our Right of Way areas maintained.

If we refunded the total amount of allocations, we would have to borrow that amount of money in order to continue operating. Having working capital helps the cooperative minimize the amount of interest bearing money it must borrow, which in turn helps keep member’s costs lower by stabilizing rates.

Whenever South KY RECC’s finances permit, we return capital credits to our members. The decision is made by our Board of Directors after a thorough examination of the co-op’s financial position. These return of capital credits will be mailed by check to members, both past and present, who received electric service from South KY RECC for the years specified and who are receiving a credit disbursement greater than $5.

The capital credits of a deceased member may be paid without waiting for a general retirement. However, these estate payments are not automatic. A representative of the estate must request the credits and then complete the Capital Credit Application. They will need a copy of the death certificate of the deceased, and a copy of the court order appointing them as administrator of the estate of the deceased or a statement from the funeral director that handled the burial arrangements for the deceased. You can apply for an estate payment of capital credits at any one of our offices.

Please check with your tax preparer, but generally, unless you deducted the cost of electricity on your tax returns, this check is treated as a reduction of those costs which is a non-taxable event. For businesses, the amount is generally taxable.

For more information, call 800-264-5112 and ask for the Capital Credits department.tel:+18002645112

Emergency Notice:

Capital Credits

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Emergency Notice:

How are capital credits calculated?

How are my capital credit allocations used until I receive them?

What’s the difference between allocated and retired capital credits?

What do I have to do to start accumulating capital credits?

How are capital credits disbursed?

Can I use the capital credits I have allocated to pay my electric bill?

Why can’t my capital credit allocations be refunded to me all at once?

What happens to my capital credits when I leave the South KY RECC service area?

What happens to the capital credits of a member who dies?

Do I need to report capital credits on my income taxes?

Main Office

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