How is your Capital Credit refund calculated?
Prior to 2003, the Board of Trustees used a "First- In-First-Out" (FIFO) method to retire and refund Capital Credits on a delayed schedule of approximately 20 years. For example, Capital Credits invested by active members during 1981 were retired and refunded to those members in 2001. The older (First-In) Capital Credits on the books were retired and refunded (First-Out) before newer Capital Credits were retired and refunded.
At the 2003 Annual Meeting, the members voted to amend the Code of Regulations to allow the Board of Trustees to determine "the manner, method and timing of retiring and refunding capital credits." This gave the Board some flexibility to choose one of several methods to retire and refund Capital Credits. Each year, based on the financial condition of the cooperative and other considerations, the Board determines which method of retirement is in the best interest of the cooperative and its members.
Since 2003, the Board of Trustees has retired and refunded Capital Credits to the members using a combination of "First-In-First- Out" (FIFO) and "Last-In-First-Out" (LIFO) methods to calculate the refunds. The combination method has been adopted by many electric cooperatives in recent years in order to include as many active members as possible in the refund process. The combination method includes more active members - especially newer, younger members - in the refund process, which promotes a stronger relationship with their cooperative.
Using the 2004 retirement and refund of Capital Credits as an example, more than 8,200 active Firelands members received a Capital Credits refund credit on their December 2004 bills, and about 3100 former members received a refund check. With the previous FIFO-only method, only about 1,900 active Firelands members would have received a refund credit in 2004, and about 4,000 former members would have received a refund check.
The FIFO / LIFO combination method refunds money to more active Firelands members, and the Board believes this is the better method to use - for the cooperative and for the members. The combination method returns more money to current active members of the cooperative, while not neglecting the cooperative's commitment to refund to its former members.
In 2004, under the FIFO / LIFO combination method, refunds were distributed to Firelands members and former members from 1983, and to members from 2003. Members in 1983 who were still active members in 2003 received a refund from both years (1983 combined with 2003). Members in 2003 who were not members in 1983 received a refund from only one year (2003). Firelands members and former members who were not members in 1983 or in 2003 did not receive a refund in 2004. Capital Credit refund date changed in 2009. To obtain additional information regarding Capital Credits, please contact us at (800) 533-8658.