Victory Electric is a not-for-profit electric cooperative with members who share in the ownership, maintenance, construction and prosperity of the cooperative. A benefit of cooperative membership and ownership is the share in the earnings/margins Victory Electric earns each year.
Victory Electric’s rates are set to bring in enough money to pay operating costs, make payments on loans, and provide an emergency reserve. A cooperative does not earn profits; instead, when revenues exceed the expense of providing electric service it is considered “margins” and returned to you in the form of “capital credits.” Capital credits are the difference in operating costs and revenues and denote each member’s ownership of the cooperative. The margins represent a contribution of operating capital by the membership to the cooperative with the intent the capital will be retired (repaid) to you in later years.
Thank you for being a member of Victory Electric. This information is an effort to help our members better understand capital credits and explain how your investment in Victory Electric is one way the cooperative difference works for you. A print-friendly version is available for your convenience.
The amount of capital credits you earn in a given year is based upon the yearly margins in relation to the amount of capital you contribute through payment of your electric bills. The more electricity you use, the greater your capital credit allocation.
Allocated capital credits are the member’s share of net margins and reflect your equity and ownership in Victory Electric. Members are allocated capital credits, and will receive an allocation notice, each year the cooperative earns positive margins. This money is set aside to be used as operating capital for improvements and maintenance over a period of years.
A retirement is the amount a member receives as a refund. It is a portion of your total allocation. When capital credits are retired, a check is issued and your equity in the cooperative is reduced. Retirements can be years after the year in which the margins were earned/allocated. Until retirement, an allocation has no cash value. The decision to refund (retire) capital credits rests with the Victory Electric board of trustees and is dependent on the financial situation of the cooperative, bylaw provisions, and the requirements of our lenders.
No special action is required to earn capital credits. Your cooperative membership, which starts when you establish electric service in your name, activates your capital credit account.
Not necessarily. While capital credit allocations are made each year, the board of trustees must authorize a retirement before you receive a check. When considering a retirement, the board analyzes the financial health of the cooperative and can only authorize a retirement if Victory Electric’s financials meet USDA Rural Utilities Service equity level requirements.
They remain on the books in the members’ name until the board authorizes a retirement. When moving, you should always provide an updated and current address.
Capital credits should not be confused with profits, which are a return on capital. Retirement of capital credits is a return of member-furnished capital. Electric cooperatives exist not to make a profit, but to provide low-cost electricity.
The capital credits of a deceased member with a residential account may be paid without waiting for a general retirement. Article VII, Section 2 of Victory Electric's bylaws provides the board of trustees the power, upon the death of any member who is a natural person, to pay a deceased patron’s estate the net present value of his/her capital credit allocations accumulated up to the date of death. Patronage capital allocated to the cooperative by an affiliated wholesale power provider, and allocated to the cooperative members as a separate allocation, will not be retired by the cooperative until such capital is retired and paid by the wholesale provider. However, at the discretion of the board, a patron’s share of such allocated capital may be retired at the death of a patron at the net present value of the allocations.
However, these estate payments are not automatic. A representative of the estate must request the capital credits by completing the Retirement of Estate Capital Credit Affidavit form and providing the required documentation. In section 2 of the affidavit form, representatives of a decedent’s estate are required to choose to receive the deceased member's capital credits in the form of a present-value lump sum payout or to wait and receive the monies as they are retired as part of the normal, non-discounted retirement process of the cooperative. For the total dollar value of a decedent’s capital credits, both discounted and non-discounted amounts, the representative of the estate must contact the cooperative.
There is no early retirement of capital credits in the case of dissolution of a business, entity, corporation or partnership. To claim payment of future retired capital credits for a business or entity ceasing to exist or has been terminated or dissolved, complete SECTION 3, FORM D: Business or Entity Successorship of the Retirement of Estate Capital Credit Affidavit form.
The Retirement of Estate Capital Credits Affidavit can be emailed, mailed or delivered Victory Electric's office. Once Victory Electric received the affidavit form and all proper documentation proving ownership by the successors, the request for payment of a decedent’s capital credits will be considered for approval by the board of trustees at the next regularly scheduled meeting. Once approved, the check will be mailed to the executor, administrator, or the listed heirs. *Note: Victory Electric cannot assist with obtaining any required documents.
For additional information or questions on estate capital credit retirements, please call Victory Electric at 620-227-2139.