Capital Credits

In a co-op, everyone gets a piece of the pie.

It Pays to Be a Member

As a member of KEC, you are also an owner. When you make a payment to KEC, a portion of that payment goes directly toward your investment in our electrical system. Unlike investor-owned utilities that generate profits on behalf of shareholders, not-for-profit electric cooperatives return any profits, or margins, to their members in the form of capital credits.

  • Who gets a capital credit refund? 

    • Every member who purchased electricity from Kay Electric during the allocation years being retired.

  • When do you return capital credits? 

    • Each year, KEC's Board of Directors evaluates how much to return, taking into consideration such factors as the impact on electric rates and financial strength of the co-op. Capital credits may not be returned every year.

  • How is my refund amount determined? 

    • Your refund amount is based on the amount of electricity used and the years of service that are retired.

  • How are the funds paid? 

    • Members receiving refund amounts of $5 or more receive a check in the mail; amounts under $5 are held until future retirements reach $5.

You received a check. What happens if:

Simply write "return to sender" on the outside of the envelope and return it to the post office. Please include an updated address if possible.

The check can be written in the heir's name once the proper paperwork is on file with KEC. Please contact us at 800-535-1079. The heir will need a valid driver's license, proof of death and properly completed and signed claim form.

Capital Credit FAQs

How do Capital Credits work?

 

The profits of KEC are allocated to our members every year. Allocation means the funds that you have invested into the cooperative are tracked, but not accessible in the form of cash. The actual distribution of funds, or retirement of capital credits, happens at the discretion of the board of directors.

At the end of each year, your board carefully assesses the financial condition of the cooperative, and determines what amount of capital credits to retire to our members. Capital credits may not be retired every year. If the board decides to retire capital credits, anyone who was a member in the year(s) being retired will receive some type of credit.

Electric utilities are capital intensive businesses requiring large investments in equipment. Like all businesses, KEC must maintain a balance between debt and equity to ensure financial stability. Capital credits are a significant source of equity and help to fund the growth and maintenance of the system.

During periods of fast growth, like what has recently been occurring in KEC’s service territory, a large amount of cash (or equity) is needed to build our system. In order to fund this growth, KEC has to borrow money from banks, re-invest member capital, or in some cases, do both. By re-investing your capital credits, KEC is able to keep rates competitive by reducing the funds that must be borrowed from other sources.

If you move out of our service territory, please keep us informed of your new address so future checks will reach you.  To report your current address for future capital credit refunds, please call our Member Services Department at 800-535-1079. 

When a member passes, the capital credits allocated to the account belong to that member’s estate. For an estate to receive a refund, a relative or representative must provide KEC with:

  • Proof of death

  • Properly completed and signed claim form

If you have received a check issued to a deceased member or other incorrectly issued checks, please contact our Capital Credit Department by email at customerservice@kayelectric.coop or call 800-535-1079 to have the check re-issued. You may be required to provide proof of identity or legal documents to prove your representation to the estate or account.

Capital credits are a return of money paid for electricity in a previous year and are generally not taxable income for residential consumers—unless the electric bills were deducted for tax purposes. Businesses may be subject to different IRS guidelines. Members should consult a tax professional for questions related to income tax filings—Kay Electric does not provide legal, tax or accounting advice and this information is provided as a courtesy.