Capital Credits ─ What are capital credits?
LPEA retires more than $3.9 million in capital credits to members ─ October 2017
Funds to be distributed as bill credits or mailed as checks during November billing cycle
DURANGO, Colo. – Archuleta and La Plata County businesses and residents who have paid their electric bills to La Plata Electric Association (LPEA) since at least 2016, will receive capital credits retirements totaling $3,925,000 during the November billing cycle.
The LPEA Board of Directors, at the regular October board meeting, approved the retirement, with most of the capital credits (also known as patronage capital) to be credited to electricity bills – though any refund amounts larger than $100 will be mailed as checks beginning Nov. 1, 2017.
“Capital credits represent our member’s investment in La Plata Electric Association,” said Mike Dreyspring, LPEA CEO, noting that LPEA is a not-for-profit corporation with a 501 (c)(12) tax designation. “As part of that tax designation, which establishes us as a cooperative, we are required to allocate margins in the form of capital credits to our members as annually determined by our board of directors. Retiring capital credits to our members is one of the many things that make electric cooperatives unique.”
Since incorporation in 1939, LPEA has retired nearly $64 million to its members.
This year, LPEA has the additional benefit of passing on retired capital credits from Tri-State Generation and Transmission, as Tri-State is a cooperative, with LPEA one of its 43 members.
“We have received $1 million from Tri-State that we are directly passing on to our members,” said Dennis Svanes, LPEA CFO. “The distribution will be a FIFO (first-in, first-out), so those who were members in 1995 will get the extra retirement.”
Capital credits are essentially the margins or revenues remaining after all expenses have been paid, according to Svanes. Annually, the electricity payments made by members more than the cost to provide their electric service is placed into a patronage capital account in each member’s name. This capital, along with borrowed funds, is used to finance needed improvements to LPEA’s system infrastructure.
“In other words,” said Svanes. “LPEA invests the margins earned by each owner back into our system. It helps build members’ equity and reduces the amount of money LPEA must borrow – so it reduces interest charges we’d have to otherwise pay. The margins allow LPEA to maintain system reliability at its highest level and help keep rates lower.”
Annually, should the patronage capital account reach a level more than the amount LPEA needs to maintain the system, the LPEA Board of Directors retires, or gives back, a percentage of the funds. For 2017, LPEA is retiring $2,193,750 in capital credits earned in 1996 and 1997 (on a first-in, first-out FIFO basis), as well as $731,000 on a percentage basis (approximately 1.18 percent) from years 1997 through 2016. Thus, anyone with an established LPEA account in 2016 or prior will receive funds in proportion to that member’s contribution to LPEA’s margins.
Annually, LPEA endeavors to find those members who have moved out of the service territory, as they are still eligible to receive retired capital credits from previous years. Members are asked to change or report new addresses to ensure receipt of capital credits.
Things you should know:
- Your capital credits are reserved for you even if you discontinue La Plata Electric Association, Inc. (LPEA) service. LPEA will attempt to reach you when refunds are made if a current address is on file.
- If you have an active electric account, credits less than $100.00 are applied as a bill credit. If the amount of credit is $100.00, or greater or you no longer receive electric service, a check is mailed to the most recent address on file.
- By request, checks may also be donated to Round Up for local organizations in need.
- Checks will expire after 90 days.
- To claim a check returned by mail, you must provide valid identification.
- In accordance with LPEA Bylaws, if your check remains unclaimed after three years following your name being published in a local newspaper in the county where you last received LPEA service, the checks assigned to the Cooperative.
- If you call to establish new service, tell us if you’ve previously been an LPEA member to help us keep past and current records up to date.
Questions? Call Customer Service at (970) 247-5786.