Capital credits represent your membership

As a cooperative, we operate on a not-for-profit basis. That means we're not in business to make money, but to provide a service to our members. By definition, a cooperative is "an enterprise that is collectively owned and operated for the mutual benefit of all members." One of these benefits happens to be the generation, accumulation, and return of capital.

Capital credits are being distributed this year on members' May statements. In 2010, we are distributing more than $550,000 in capital credits to members. In the 74 years we have been in business, more than $9 million has been paid back to past and current members.

Capital credits are based solely on patronage; therefore, the more electricity purchased, the more capital credits earned and eventually returned to the member. Energy rates are established to recover the cost to serve our members plus meet required financial obligations. When the co-op makes margins (profits), the margins are used to pay for capital investments including poles, wire, and equipment.

At the end of the year, any margins that exceed annual costs are allocated to you in the form of CAPITAL CREDITS or "patronage dividends," as they are referred to in the by-laws. Each year you will get a statement on your bill indicating the amount of capital credits in your account from all meter locations. The issuance and method of payment of capital credits requires board approval.

Under the present tax code, when capital credits are refunded, they are considered nontaxable only if you did not deduct power usage as a business expense during the year.

Capital credits are allocated in the spring

In May, your Capital Credit Allocation and Retirement/Credit Activity is printed on your statement.

Your share of 2009 earnings is shown on the statement and is applied as a credit on your account. Also shown is your ending capital credit balance, which represents the amount of equity you have in the co-op.   See sample statement below.

Retirement of capital credits is discretionary

Even if there is a capital credit balance shown, there is no provision in Rock Energy Cooperative's by-laws for early payment of capital credits except for estates. Capital credits are paid back on a percentage basis, which is decided by the Board of Directors. In the meantime, your capital credits are used to maintain and upgrade REC's energy distribution system and to repay associated indebtedness.

The general retirement of capital credits will be made at the discretion of the Board of Directors, in accordance with cooperative by-laws.

Unclaimed capital credits

We maintain a list of active or inactive members who have unclaimed or uncashed capital credit checks on file with Rock Energy Cooperative. If you find a familiar name, please contact us or ask the individual member or the estate executor to contact us personally by phone at 608-752-4550 or toll-free at 866-752-4550. You can also contact us by mail at Rock Energy Cooperative, PO Box 1758, Janesville, WI 53547.