Victory Electric is a not-for-profit electric cooperative with members who share in the ownership, maintenance, construction and prosperity of the cooperative. A benefit of cooperative membership and ownership is the share in the earnings/margins Victory Electric earns each year.
Victory Electric’s rates are set to bring in enough money to pay operating costs, make payments on loans, and provide an emergency reserve. A cooperative does not earn profits; instead, when revenues exceed the expense of providing electric service it is considered “margins” and returned to you in the form of “capital credits.” Capital credits are the difference in operating costs and revenues and denote each member’s ownership of the cooperative. The margins represent a contribution of operating capital by the membership to the cooperative with the intent the capital will be retired (repaid) to you in later years.
Thank you for being a member of Victory Electric. This information is an effort to help our members better understand capital credits and explain how your investment in Victory Electric is one way the cooperative difference works for you. A print-friendly version is available for your convenience.
The amount of capital credits you earn in a given year is based upon the yearly margins in relation to the amount of capital you contribute through payment of your electric bills. The more electricity you use, the greater your capital credit allocation.
Allocated capital credits are the member’s share of net margins and reflect your equity and ownership in Victory Electric. Members are allocated capital credits, and will receive an allocation notice, each year the cooperative earns positive margins. This money is set aside to be used as operating capital for improvements and maintenance over a period of years.
A retirement is the amount a member receives as a refund. It is a portion of your total allocation. When capital credits are retired, a check is issued and your equity in the cooperative is reduced. Retirements can be years after the year in which the margins were earned/allocated. Until retirement, an allocation has no cash value. The decision to refund (retire) capital credits rests with the Victory Electric board of trustees and is dependent on the financial situation of the cooperative, bylaw provisions, and the requirements of our lenders.
No special action is required to earn capital credits. Your cooperative membership, which starts when you establish electric service in your name, activates your capital credit account.
Not necessarily. While capital credit allocations are made each year, the board of trustees must authorize a retirement before you receive a check. When considering a retirement, the board analyzes the financial health of the cooperative and can only authorize a retirement if Victory Electric’s financials meet USDA Rural Utilities Service equity level requirements.
The capital credits of a deceased member with a residential account may be paid without waiting for a general retirement. However, these estate payments are not automatic. A representative of the estate must request the capital credits by submitting a capital credit retirement application and a copy of the death certificate.
They remain on the books in the members’ name until the board authorizes a retirement. When moving, you should always provide an updated and current address.
Capital credits should not be confused with profits, which are a return on capital. Retirement of capital credits is a return of member-furnished capital. Electric cooperatives exist not to make a profit, but to provide low-cost electricity.