FAQs about Capital Credits
What are Capital Credits? Capital Credits are allocated to Firelands members from the margins (total revenue minus all expenses) available at the end of each year. Capital Credits are not cash deposited into a bank account. Instead, they represent each member’s portion of the “ownership” of the cooperative. Firelands uses your Capital Credits to build, maintain and improve your distribution system; and Firelands expects to use this funding for approximately 20 years before it is “retired” and refunded to you.
How many Capital Credits do I have? The average Firelands member has about $1100 in Capital Credits. This includes Capital Credits from Firelands and from Buckeye Power, your generation cooperative, which also allocates Capital Credits to Firelands members. Each spring you are sent a statement of your total Capital Credits and the amount allocated from the previous year.
If I move away, can I withdraw all my Capital Credits? No. If you are no longer a Firelands member, you will continue to receive Capital Credits refunds on the normal refund schedule along with all cooperative members, provided you give Firelands your current address.
If I die, can my heirs withdraw all my Capital Credits? No. Under the current policy, heirs of deceased members estates will receive Capital Credits refunds on the normal refund schedule along with all cooperative members. Heirs may request a single lump sum payment, if desired, which is discounted based on the present value of money.
Why did Firelands’ Board of Trustees change the policy for refunding Capital Credits to estates? It was the right thing to do. It reduced costs in order to hold down your electric rates.
- Under the old 1950 policy, the heirs of deceased members received special preferential treatment by receiving accelerated refunds of the entire Capital Credits account immediately; but no members or former members of the cooperative are permitted to receive special preferential refunds. The new 2003 policy treats all members, former members, and heirs equally – all receive refunds on the normal refund schedule, and no one receives special preferential treatment.
- Special accelerated refunds cause higher electric rates. This is because Firelands plans to use each member’s Capital Credits for approximately 20 years before retiring and refunding them. Special accelerated refunds demand extra cash because the Capital Credits are refunded early – ahead of schedule. The only sources of extra cash are from Firelands members paying more for their electricity each month, or borrowing from our lenders, which means paying more interest.
To obtain additional information regarding Capital Credits, please contact us at (800) 533-8658.