PORT ORFORD – Heirs of Coos-Curry Electric Cooperative (CCEC) members may now elect to receive capital credits due those members upon their death, but at a reduced rate.
“We budgeted $300,000 for this year because this is a new policy and we expect to see a lot of requests,” Chief Financial Officer Frank Corrales told the CCEC board of directors last week. “If we get applications that go beyond what we have budgeted, we’ll have to come back to the board for a decision to either allocate additional funds or hold the applications for next year.”
Unlike a for-profit company, a cooperative does not earn profits and does not sell stock to get operating funds or build equity. Instead, cooperatives collect the money they need to operate and build equity through the rates they charge.At the end of each calendar year, any excess revenue after all operating expenses have been paid, becomes the cooperative’s margin, which is reinvested in the cooperative and used to pay down debt and maintain good financial parameters.
Margins are allocated to individual members in the form of capital credits every year, according to that member’s use of the services the cooperative provides.
“It’s based on the amount of electricity you purchased during that time,” CCEC spokeswoman Christine Stallard said.
Periodically, as financial conditions allow, capital credits are returned according to the cooperative’s bylaws which are “first in, first out.”
Depending on financial conditions, cooperatives will make the decision to “retire” or return capital credits.
Normally, a cooperative returns those capital credits in about 30 years, often to heirs of members who have been long dead. Last year, CCEC returned capital credits to members who purchased electricity from the cooperative from 1977 through 1979.
The board last week adopted the change in the way capital credits may be retired upon the death of an individual member or former member.
Under the new policy, upon the death of a member, a personal representative or heir may complete an application and elect to retire the capital credits on a normal rotational basis or to immediately retire the capital credits at a discounted rate.
If the heirs decide to take the early payments, CCEC will use a formula to determine the amount due.
The personal representative or heir will be required to complete an application form and submit other documents required by the cooperative’s policy and to comply with state and federal law.
In the case of a joint membership, where one member is deceased, the capital credits will not be paid. They will remain on the books in the name of the surviving member.
The amount paid out to retire capital credits for deceased members or patrons under this policy will be determined each year by the board of directors.
“With regard to this policy change, we expect to receive a lot of questions from members over the next few weeks, so we have arranged to have representatives at our after-hours call center take the calls for us,” Corrales said.
A representative will gather some preliminary information and a CCEC employee responsible for capital credits will call the member back as quickly as possible. Members with questions about this policy should call 866-305-1278.