Capital Credits

Glades Electric Cooperative is owned by you, our members. Yes, you are actually part owner of an electric cooperative – just like stockholders who own Duke Energy or Florida Power & Light.

However, GEC doesn’t issue stock shares like an investor owned utility. We have Capital Credits. Stock shares are used to determine what portion of a corporation each shareholder owns. Capital Credits are used for the same purpose in a cooperative. However, federal law states that unlike stock shares, Capital Credits may not be sold or cashed. The biggest difference between stock shares and Capital Credits is that stock shares are an investment to make profit for an individual. Capital Credits are an investment in the future of our communities.

Capital Credit FAQs

What are capital credits and where does the money come from?

Member-owned, not-for-profit electric cooperatives operate on an at-cost basis. Rates are set to generate enough money to pay operating costs, make payments on any loans and provide an emergency reserve. At the end of each year, operating expenses are subtracted from operating revenue collected. The balance is called an operating margin. Margins are allocated to members as capital credits based upon the amount of power the member purchased. Later, as financial conditions permit, these allocated amounts—capital credits—are retired. Capital credits represent the most significant source of equity for Glades Electric Cooperative.

Since a cooperative’s members are also the people the co-op serves, capital credits reflect each member’s ownership in and contribution of capital to the cooperative. This differs from dividends that investor-owned utilities pay shareholders, who may or may not be customers.

Why does GEC retain Capital Credits?

Capital Credits sustain the business of the cooperative. They are used to build new lines, pay wholesale power bills, and to generally keep a positive cash flow at the co-op. The members’ Capital Credits enhance the co-op’s ability to hold down electric rates.

A member may ask, “If the co-op is doing all that with my Capital Credits, what benefit are they to me?” At the end each year, after all operating expenses have been paid, a prorated percentage of its margins is allocated to member-owners based on the amount each member paid for electricity during the year. This allocation of margins is known as Capital Credits.

When are Capital Credits refunded?

Each year, the GEC Board of Trustees determines how much of those annual margins are required to run the business in the coming year. The amount not needed to pay down debt or for required new construction of system restoration projects is returned to each member in the form of “Retired Capital Credits.” All monies retained in the business build your equity in the company. Some years, the co-op may experience high growth, or severe storms may require spending more to repair lines. Such events might increase costs and decrease member equity, causing the board not to retire capital credits each year.

When did Glades Electric last retire Capital Credits?

In 2018, we retired Capital Credits allotted in 1983. If you were not a member in 1983, you would not have received a bill credit or check for the retirement.

How does a member know the amount of their Capital Credits retained by the cooperative?

Once a year, usually in April or early May, each member will receive a written notice of the amount of Capital Credits allocated for the previous year. If your account is active, the notice will be printed on your bill, which should be retained in your permanent records. The annual allocation cannot be used as a credit against your current electric bill. The information is provided only for your records. If your membership is no longer active, you will not receive a notice. You should, however, make sure your current address is on file with the Capital Credits representative at the Cooperative.

What if I move?

When you move or no longer have service with GEC, it is important you keep the cooperative updated with your current address so future retirements can be mailed to you. You are entitled to capital credit retirements even if you move out of GEC’s service area. If we have your current address, we will mail your retirement check if you had an account during the year(s) for which capital credits were retired.

Capital Credit Transfer Application

To claim retired capital credits or present day value capital credits for a deceased member, download the Capital Credit Application (PDF). If you have any questions, please contact the Member Service Department in your local office, or call us at 863-946-6200.