Frequently Asked Questions
About Capital Credits
What are capital credits?
Capital credits are equity members accumulate in the cooperative through their patronage. Margins in excess of the cost to serve members are used as operating capital. At the discretion of the board of directors, net margins are distributed to members through a capital credit system.
How do members accumulate capital credits?
Whenever the cooperative realizes a positive margin for the year, capital credits are allocated based on the member’s usage.
What is the difference between a not-for-profit cooperative and an investor-owned utility?
An investor-owned utility is operated on a for-profit basis to benefit its stockholders. When your cooperative has a margin at the end of the year, that amount is placed into members’ capital credit accounts and refunded at the board’s discretion.
Can capital credits be applied toward the energy bill?
No. Capital credits are kept in a separate accounting system apart from your billing account.
Why is Corn Belt Energy refunding capital credits now?
The present financial condition of the cooperative allows for funds to be returned to members.
Who will receive a refund?
Anyone who had service with Corn Belt Energy Corporation (CBEC) in 2004 or prior years that include the following:
· 1947-1955 (formerly Illinois Valley Electric Cooperative)
· 1954 – part of 1963 (formerly Corn Belt Electric Cooperative)
Do natural gas accounts accumulate capital credits?
At this time, no capital credits have been allocated for natural gas accounts, because the co-op has not experienced positive margins.
Why aren’t capital credits refunded every year?
They are refunded at the board’s discretion when the financial condition of the cooperative allows.
How much has CBEC returned in capital credits?
To date, we have returned over $6.5 million to our members.
What is the difference between capital credit allocation and refund?
When income exceeds expenses in any given year, margins are allocated to each member’s capital credit account according to their usage. This is called allocation. Capital credits are refunded when the board determines that returning funds will not jeopardize the financial condition of the co-op.
How can I be sure to get capital credit refunds if I move?
Keep your address current with CBEC. This will enable us to forward payment when capital credits are refunded in the future.
What happens to capital credits if someone dies?
If a person died after 1997, the heirs are eligible to receive a discounted estate retirement.
Is interest accrued on Capital Credit accounts?
No interest or dividends are paid in accordance with the bylaws. (See Article IX, Sect. 1, page 30).
When was the last time CBEC refunded capital credits?
1996
Do I have to claim capital credits as income on my tax returns?
If you claimed electricity as a business deduction during a given year, refunded capital credits may be taxable. Check with your tax accountant.
How long do members have to cash their checks?
Checks must be cashed within 120 days.
What is a margin?
Margins are revenue minus expenses.
How much equity is the co-op required to maintain?
Our lenders strongly recommend we maintain 30-40% equity. Equity is capital credits (what the members own) versus borrowed money.
If the co-op had big losses, would I be asked to pay through increased rates?
Whenever the cooperative incurs additional expenses, we may need to borrow money. Additional interest expenses reduce margins that are available to return to members. Since CBEC is owned and governed by our members, every effort is taken to avoid raising rates.
If I get energy assistance, will I get money back even though someone else paid my bill?
If the bill is listed in your name, it doesn’t matter who actually paid the bills. You will get the refund.
If there are two names on my check, do both people have to endorse the check?
Yes. Your bank will most likely require both signatures.
If the check is in my spouse’s name and he/she is deceased, can I sign it?
No. You should return the check to the cooperative and call (866) 806-3411. We will send you an estate packet to complete before the check will be reissued.
No.
Why is Corn Belt refunding for years that were so long ago?
During earlier years, margins were reinvested into the co-op and used to reduce debt. Corn Belt Energy’s board of directors decided it would benefit current members the most by returning approximately 60% of the $4,000,000 refund for electric usage during 2004. The remaining $1.6 million is being distributed based on usage in prior years.
If you currently have service with the cooperative and your refund is less than $15.00, that amount will remain in your capital credit account until the total is $15.00 or greater. If a person is no longer a Corn Belt Energy member, the refund will be mailed regardless of the total.