Capital Credits

Farmers' Electric is a nonprofit cooperative, operating for the mutual benefit of its patrons. The patrons furnish capital for the Cooperative. This capital is received from the members in the form of monthly bills for kilowatts used, line extension fees for lines built, and service charges that are paid monthly to the Cooperative. The Cooperative is required to account for all amounts received on a patronage basis for all amounts received from furnishing electric energy in excess of operating costs. This difference is called "patronage capital or margins." The cooperative assigns capital credits for each patron all such amounts in excess of operating costs and expenses. For each year that the member is paying an electric bill the Cooperative's margins will be allocated to the member. At the end of each fiscal year, Farmers' Electric mails to the members "allocation of capital credit notices." This is not a check, but a notice of how much the member has been allocated to their capital credit account. This notice states that the member will be paid this amount when the actual capital credit check is written.

The Board of Trustees, at one of their monthly meetings will vote to return a percentage of the patronage capital to the membership. The "credits" that each member has earned from their patronage 20 years prior to the allocation of the Board of Trustee vote will be returned to them. Any excess patronage capital to be allocated after the 20th year is paid in full, the remainder of the capital is paid as a percentage of the remaining years. The actual check that the member receives will be for their patronage 20 years ago and a percentage of the years to the 20th year.

Members may assign the capital credit check to Farmers Electric Education Foundation. The donations and unclaimed patronage capital checks fund scholarships for Farmers' Electric's members and their direct dependents to receive scholarships to attend colleges and universities.