your slice of the co-op pie
Pella Cooperative Electric is a not-for-profit electric co-op and we belong to the communities we serve. Which means we're not in the business of making profits, we're in the business of serving you, our member. We return margins in the form of capital credits - paid directly to our members as a bill credit.
What is a capital credit allocation?
Every spring, the Board of Directors looks at the prior year and allots any funds remaining after all expenses are paid into a budget item called patronage capital. This designated pool of money is then “allocated” to members, based on the prior year’s electric consumption. In this case, the more power you use, the larger your allocation. The allocation is not a check, but a bookkeeping of the amount of money you have invested in the Co-op’s electric system based on your electric consumption. This allocation amount is notified to members on bills every year.
What are capital credit retirements?
Every year the Board takes a hard look at the operation, and decides if a member credit payout or "retirement" is feasible. If they decide to retire member credits, the money is paid out or “retired” from each member’s account, based on their past allocations. The credits members receive are tangible evidence of each member’s investment into the co-op.
For any tax questions regarding your member credits, please refer to your tax advisor.
2020 Capital Credit Refunds
In December 2020, the Board of Directors approved the retirement of $162,000 in capital credits. Any members who received electric service from PCEA in the years 2002 and 2019 received a capital credit refund on their February bill. Any former members who were due a capital credit refund received a check in the mail, as long the check amount was larger than $25 or was the final capital credit payment. Otherwise the check will be sent when the credit on their account exceeds $25. Since capital credits are retired for previous years, it is important that you keep your current mailing address on file with Pella Cooperative Electric, even if you are no longer a member of the Cooperative. Need to update your address? Email us at firstname.lastname@example.org.
Capital Credits Frequently Asked Questions
At the end of each year, after all of the cooperative’s bills have been paid and all expenses considered, the amount of money that is left over is called a margin. Margins provide equity for the cooperative and are allocated to the members in proportion to their purchases of electricity during the year. Capital credits are your share of the margin. Capital credits are allocated annually to each member and are retired in accord with the cooperative’s bylaws.
If you have questions regarding your capital credits, please contact us at 641-628-1040.
You will still receive your capital credit checks from previous years of membership with PCEA. When you close your account with us, we ask for your forwarding address so we can mail your capital credits retirement checks to your new address. Let us know your new address by emailing us at email@example.com.
Our co-op uses these funds as working capital to maintain the existing distribution system and to build new infrastructure without having to borrow more money than needed to do so. This is why we allocate funds, and in later years pay out the capital credit funds back to you. It's part of your economic participation in the co-op.
Call the co-op at 641-628-1040 and we will be able to help you out.
Every year, after the previous year's accounting is finalized, any funds remaining after all expenses are paid (margins) are allocated to members that purchased power in the previous year. These funds are called patronage capital and are later paid out as capital credits.
PCEA uses these funds as working capital to maintain the existing distribution system and to build new infrastructure without having to borrow any more money than needed to do so.
Every year the co-op takes a hard look at our financial situation and determines how much the cooperative can retire, or pay out, in capital credits. The credits members receive either by a bill credit, typically in December, are tangible evidence of each member's investment into the cooperative.
We are required by our lending institutions to meet certain financial requirements to show that the cooperative is financially stable. However, all margins are allocated back to our membership, and later paid out as capital credits.
We suggest that you seek the advice of a tax professional for any specific questions regarding taxation.
Every year, after the previous year's accounting is finalized, any funds remaining after all expenses are paid (margins) are allocated to members that purchased power in the previous year. These funds are called patronage capital, and are based on prior year's electric use - the more electricity you use, the larger your allocation. Your allocations build up over the years, and are later paid out as capital credits.