Captial Credits

What are they?
Cooperatives like Federated Rural Electric operate on a not-for-profit basis; it means that all profits (we call them margins) are returned to the members in the form of "capital credits." These margins are used up to 20 years to help Federated construct its powerlines and facilities to maintain the most reliable electricity delivery system, while keeping the rates as low as possible. If all margins were returned immediately to the membership, additional outside financing and a rate increase would occur to keep the cooperative financially solvent. The margins assigned to you as capital credits are actually an investment in keeping your cooperative a reliable and efficient organization.

When do I receive my capital credits?
Federated Rural Electric's Board of Directors determine the payment of capital credits. Under their policy a combination of last year's and prior years' margins are returned. The checks are mailed before the Annual Meeting (November). The Board annually determines if Federated has adequate capital to return the margins.

What if I move off Federated's lines?
If you ever move, inform the cooperative about any address changes so you will receive your capital credit checks when they are mailed.

What happens to my capital credits after I die?
In the event a member who has capital credits assigned to them dies, the survivor can make a decision about the capital credits. The survivor may receive a discounted amount of these credits immediately. Otherwise, the survivor may leave them with Federated and receive them as the capital credits are routinely paid back to the membership.

How much has Federated returned to members?
Federated Rural Electric has returned approximately $4.1 million in capital credits to its membership during the last decade.