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September 2007

Cooperatives & Capital Credits : Q&A

A total of $792,903 is being refunded to Florida Keys Electric Cooperative members as Capital Credits this year.

As a not-for-profit cooperative utility, Florida Keys Electric Cooperative allocates its margins -- the revenues earned in excess of the cost of doing business -- to its members. Margins are retained by FKEC for a number of years to improve the electric system and to avoid borrowing money. These margins are then returned to members as Capital Credits.

This year's Capital Credit refund represents 40 percent of FKEC's margins from 1990. Refunds are based on the amount of revenue each member paid in 1990, so refund amounts vary in proportion to the amount of electricity each member used that year.

Common questions about capital credits are answered below.

Q:    Why did I just receive a Capital Credit check from FKEC?

A:   Despite the fact that more than one in every ten Americans is served by an electric cooperative, many members are still confused by Capital Credits and why they receive them. This year, FKEC is issuing Capital Credit refunds to more than 11,000 account holders or former account holders as either refund checks or as credits on their bills.

As a not-for-profit utility, FKEC allocates all revenues earned in excess of the cost of doing business (called "margins") to the consumers it serves. Each consumer has a "Capital Credits Account" with FKEC, and the dollar amount allocated to each account is based on the amount of revenue each individual member contributed for the year. Margins are retained by FKEC for a number of years to improve the electric system and to avoid borrowing money, which helps keep electric rates low.

Q:    Why does FKEC give back profits to its members when other utilities don't?

A:    Although cooperative utilities provide power to homes and businesses in the same way as other types of electric utilities, cooperatives are owned by consumers (not private investors or the government). All cooperatives are also guided by seven principles that reflect the best interests of those consumers. One of the seven principles is "Members' Economic Participation," which means that all members contribute equitably to the capital of their cooperative.

This year, FKEC is returning 40% of the capital contributed by members in 1990. Current members with active accounts due less than $20 will receive bill credits instead of checks.

Q:    Why are the checks for all different amounts? Shouldn't we all get a fair share?

A:    Individual refunds amounts are fair, because they are based on the percentage of revenue each member contributed in 1990. So the refund amounts vary in proportion to the amount of electricity used by each member in 1990.

Q:    Why didn't I get a check?

A:    Because margins are retained for a number of years before being returned, you had to be a member in 1990 to get a check this year. It is important that members moving away from the area keep a current address on file with FKEC in order to receive refunds in the future.

Q:   Is this interest on my deposit?

A:    No. Although the deposit on your electric account does collect interest, it is held in a completely separate account from your Capital Credit account.

Q:   My name has changed, what should I do?

A:    If your name has changed, contact either FKEC office to change the name(s) on the account. We will begin to reissue checks in January.

Q:   The member is deceased, what should I do?

A:    Contact FKEC for an application. Once complete, it will be reviewed by our attorney and a check reissued based on his instructions.

Q:   Do you have forms available online?

A:   Capital Credits transfer forms currently available online:  

* Application to Transfer Capital Credits of Deceased Members (4 pages)
* Affidavit of Transfer of Capital Credits for Active Corporations (2 pages)
* Affidavit of Transfer of Capital Credits for Dissolved Corporations (2 pages)

NOTE: You must have the free Adobe Acrobat Reader installed on your computer to view these files.

Q:   I have more questions. Who should I talk to?

A:    Contact the Tavernier office (305-852-2431) and ask for Member Service.

Scott is an active member of the Upper Keys community and is a past president, current director and president-elect of the Rotary Club of Key Largo, is a director for the Key Largo Chamber of Commerce and is co-founder and president of the Upper Keys Golf Association.

In 1994, Scott completed the three-year national electrical course for apprentice linemen to further his education in cooperative operations. He is a graduate of Leadership Monroe County Class XI and completed the National Rural Electric Cooperative Association's Management Internship Program in 2005.

Scott graduated from Arkansas State University with a degree in Agriculture Business and Economics in 1986. In 1988, he began his career in the electricity industry when he joined the Rural Electrification Administration (REA) in Washington, D.C. With the REA, he worked first as a Commercial Loan Specialist and was later promoted to Power Requirements Officer before moving to the Florida Keys to join FKEC in 1990.