Capital Credit FAQs
What's the difference between allocated and retired capital credits?
Allocated capital credits appear as an entry on the permanent financial records of the association and reflect your equity or ownership in Dakota Valley Electric Cooperative. When capital credits are retired, a check is issued to you and your equity in the association is reduced.
How often will I receive an allocation notice?
All members who had an active electric account will receive an allocation notice annually after the finances for the previous year have been audited provided the cooperative earned margins in that year. This notice will be on your April electric bill. If your account became inactive, a notice will be sent in the mail.
What do I have to do to start accumulating capital credits?
Capital credits are calculated by Dakota Valley for everyone who purchased electricity during a year in which the utility earned margins.
How are capital credits calculated?
The amount of capital credits you earn in a given year is based upon the amount of patronage you contribute to Dakota Valley through payment of your monthly bills. The more electric service you buy, the greater your capital credit balance. The sum of your monthly bills for a year is multiplied by a percentage to determine your capital credits. The percentage of your total payment that is allocated as capital credits varies from year to year depending upon the success of the cooperative. Capital credits are only allocated for a year in which Dakota Valley Electric Cooperative earns margins.
Are capital credits taxable?
This is a question that the cooperative can not answer. Whether they are taxable or not depends on how you accounted for them previously. To answer this question you should seek the advice of a tax expert.
Do I have to be a customer for an entire year to earn capital credits?
No. Capital credits are calculated based upon a member's monthly bills. If you are billed for service for even one month, you will accumulate some capital credits, if Dakota Valley earned margins in that year.
Who gets the capital credits in the case of a divorce?
In the case of a divorce the couple should decide how to divide the capital credits. There are a few different options available to you:
1. Leave the capital credits under the joint account
2. Capital credits can be split 50%-50%
3. Capital credits can be transferred to one person at 100%.
4. Capital credits can be paid out under the 25% buyout option for an inactive account.
The cooperative has a form that needs to be signed if selecting any of the last 3 options. If you have any questions, please call our office at 1-800-342-4671.
What happens to the capital credits of a member who dies?
Dakota Valley offers two options to families or executors settling the estate of a person who was a member of Dakota Valley and has a capital credit account.
One option is to re-assign the capital credits to the heir or heirs of the estate, with the capital credits continuing to be retired in the normal rotation over the years ahead. With this option, the heirs will receive over time every dollar in the former member's capital credit account.
The second option is for the estate to request an early retirement of capital credits to the estate. The cooperative offers this option because it recognizes that some estates desire to settle all accounts and complete the transfer of assets. For estates which chose this option, the capital credit amount is discounted by a factor for each year in advance of the normal retirement. The discount factor is adjusted each year to correspond to the cooperative's average cost of debt.
Why are capital credits discounted to estates?
The capital credits are discounted in order to balance the fairness between the estate and the other members of the cooperative, recognizing the time value of money (funds received today are worth more than funds received some time in the future). Call Dakota Valley Electric to have an estate application sent out.
What happens if a spouse who is a joint member dies?
In the event of the death of a person in a joint membership, the surviving member has the option of re-assigning all the joint capital credits over to his/her name where they will be retired in the normal rotation; or another option is that half may be paid under the estate retirement at a discounted rate. The remaining half is transferred to the surviving member.
Will I receive a capital credits check every year?
Not necessarily. The Board of Directors must authorize a retirement before you receive a check. When considering a retirement, the Board analyzes the financial health of the association and will not authorize a retirement if Dakota Valley cannot afford it.
What happens to the capital credits if the cooperative is unable to locate a member?
The cooperative tries very hard to locate members who have not cashed their capital credit checks. Ads are placed in the ND Living Magazine and in area newspapers asking people to call in if they know the whereabouts of a member on the list.
If the member doesn't claim the check within 6 months the cooperative records the capital credits as donated capital credits and the money stays with the cooperative.
Review a list of past members whose capital credits remain unclaimed.
What happens to terminated accounts?
Upon termination of an account, the capital credits will continue to be paid in the normal rotation for retirement. There is also a "Buyout Option" where 25% of the unretired capital credits are available to all inactive Cooperative membership accounts(natural persons and non-natural person memberships). A buyout request form (available from the Cooperative) must be submitted by the member to the Cooperative. If the Board of Directors determines, in their sole discretion, that the pay out of the buyout offer option will not jeopardize the financial condition or operation of the cooperative, board approval will be given and the buyout amount immediately paid to the member.