INSIDE PIONEER ELECTRIC
The cooperative advantage
Capital credits are one of the most unique and rewarding benefits you have as a member of an electric cooperative. One of the cooperative advantages is that we provide our members with “at cost” service, which means we do not exist to earn a profit. Investor-owned utilities, on the other hand, maximize their profits from their customers with the purpose of paying dividends to stockholders.
At a cooperative, there is no stock to be purchased or sold — our members own our business. Pioneer Electric Cooperative returns funds not used for operating costs to members in the form of capital credit allocations. Since 2015, we have returned approximately $7.3 million to members.
INSIDE PIONEER ELECTRIC
Unclaimed capital credits listing
The Unclaimed Capital Credits list contains the names of members whose checks have been returned to us because of an incorrect address. Call us at at 800-239-3092 if you, your organization or a deceased relative are listed.
INSIDE PIONEER ELECTRIC
Capital credits FAQ
Because Pioneer Electric is a cooperative, owned by our members, we do not technically earn profits. Instead, any revenues over and above the cost of doing business are considered “margins.” These margins represent an interest-free loan of operating capital by the membership to the cooperative. This loan allows Pioneer Electric to finance capital needs of the cooperative, with the intent that this capital be repaid to you in later years.
You need to know two things about capital credits to understand how they work for you:
Allocations: Each year, you are “allocated” your portion of the previous year’s margins based on the amount of electricity you purchased from Pioneer Electric in relation to the total amount of electricity purchased by all the members during the year. This amount is recorded in the cooperative records and the money is used by Pioneer Electric to fund capital needs for items such as power line construction, transformers, trucks, inventory and other operational needs. This is an underlying principle of the cooperative business model and is one more way we keep your electric rates as low as possible. This “allocation” becomes your equity in the cooperative and is maintained in a separate account assigned to you.
Retirement: This is what you will get in cash at a later date. Pioneer Electric uses the amount “allocated” to you for a time, but then returns this amount to members in the form of “retirements,” which are actual “cash back” dollars to you. When capital credits are retired, your equity in the cooperative is reduced.
Capital credits are calculated by Pioneer Electric for everyone who purchased electricity during a year in which the utility earned margins. No special action is required to start a capital credits account. Your membership with Pioneer Electric activates your capital credits account.
Each member receives an allocation notice annually after the finances for the previous year have been audited.
For individuals, capital credits are generally not taxable. We suggest you seek the advice of a tax professional for any specific questions.
Our bylaws require your Board of Trustees to determine the amount of retirement (cash back) each year based on the financial condition of the cooperative and other considerations. We have reduced our capital credit cycle to 16 years, which is among the shortest cycles in Alabama.
In the case of a deceased member, the heirs need to make sure that their addresses are left with the cooperative so that the rightful heirs get the capital credits when they are paid.
Upon the death of either member of a joint membership, the name of the deceased person is removed from the membership, and the membership is held solely by the surviving member.
Members with multiple account for different service locations will receive a consolidated capital credit allocation statement and/or check whenever possible, grouped under a single membership number. Please note that, at times, a separate capital credit allocation statement and/or check may be sent to you. The detail on each account will be displayed on these forms for tracking purposes.
The member should inform our office of any changes in his or her mailing address. It is a member’s responsibility to make sure the cooperative has up-to-date address information at all times. Each year, hundreds of refund checks are returned to the cooperative with invalid addresses.
Each member has a separate capital credit account, which represents the member’s ownership in the cooperative. When the capital credits are allocated, all members who received electric service during that year will receive an allocation notice showing their current year’s allocation. Our customer service representatives can access the account to tell you your total allocation.
Not necessarily. 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 will not authorize a retirement if Pioneer Electric cannot afford it.