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Your electric cooperative is different from an investor-owned utility. Southwestern Electric Cooperative is owned by the people to whom it supplies energy--the members. Capital credits represent each member's ownership stake in the organization. At the close of each fiscal year, the cooperative’s margins (revenues in excess of expenses), if any, are allocated back to the membership in the form of capital credits.

General retirements are issued at the discretion of Southwestern Electric’s board of directors. Each year, based on the cooperative’s present financial condition and other considerations, the board of directors determines whether to issue a retirement, and if so, in what amount. The cooperative pays out accumulated capital credits to the estates upon the member’s death, regardless of whether there was a general retirement for that year.

CLAIMING ESTATE CREDITS

In order for capital credits to be disbursed to the estate of a deceased member, the final bill of said member must be paid in full and the certain documentation (including, but not limited to, the following items) must be submitted to Southwestern Electric Cooperative. Those items are:

  • A copy of the death certificate
  • A letter of office from the attorney handling the estate or a small estate affidavit completed by the estate's executor or administrator; and
  • Proof of executorship or administration of the estate.

For more information, call (800) 637-8667 or see our brochure (prints as 8.5x14).

Here are the answers to some of the most frequently asked questions about capital credits.

Why is Southwestern Electric Cooperative (SWECI) changing how estates and members moving offline are paid capital credits?

  • The board of directors revisited Southwestern’s capital credit policy to meet your needs— the needs of a changing membership. You’re far more mobile than you were when our policy was originally drafted in 1939. We have members who relocate five times in 10 years, eventually moving off co-op lines. Each change of address is an opportunity to fall out of touch. That can make it difficult to return capital cred­its to people who’ve earned them. Recognizing that, Southwestern’s board of directors decided to offer an adjusted early payout option to the co-op’s capital credit retirement policy.

How is Southwestern Electric Cooperative (SWECI) changing how estates and members moving offline are paid capital credits?

  • Beginning Jan. 1, 2024, you may apply for an adjusted early payout of capital credits if you’re terminating your membership or if you’re the executor of an estate with capital credits.

    In the past, Southwestern didn’t offer the option of adjusted early payouts. SWECI has always paid capital credits in a lump sum to estates of deceased members. SWECI is still paying estates in a lump sum, but we will begin paying the cash value of the future payments in today’s dollars or at an adjusted net present value, and not at face or book value beginning January 1, 2024.  Executors also have the option to transfer the capital credits to their active membership and receive the assigned capital credits for the estate during future general retirements at face value.

    Likewise, the capital credits paid to members moving offline will also be allowed to cash out their assigned capital credits in a lump sum in today’s dollars or receive their capital credits during future general retirements at face or book value as always.  It’s important to ensure that SWECI has your current and accurate address on file so that any future payments can be delivered to you without any delay.  You may confirm your address by contacting the office at 1-800-637-8667 or emailing us at billing@sweci.com. 

Why are early payouts adjusted—why don’t you pay out in full, as you do with a general retirement?

  • Early payouts for estates of deceased members or those no longer receiving our services reflect a short­ened maturity term and offers fairness to the payout structure. Please bear in mind that receiving annual, board directed general retirements is another option.

What are capital credits?

  • Capital credits are your equity in the co-op. They represent your share in the ownership, maintenance, construction and success of Southwestern Electric Cooperative. The cooperative’s rates are designed to bring in enough money to pay operating costs and maintain an emergency reserve. When revenue exceeds ex­penses, that money is later returned to members as capital credits.

    The capital credits assigned to you in a year are based on the cooperative’s annual margins — the revenue that exceeded Southwestern’s operating costs — and the capital you contributed by paying your electric bills. The more power you use, the more capital credits the co-op assigns to your account.

Why does the cooperative need to accumulate equity?

  • Rates and loans are the two sources of cash for an electric cooperative.  Accumulated equity decreases the need for Southwestern Electric to raise electric rates or borrow additional money for infrastructure improvements. It also makes it easier for the co-op to absorb costs associated with recovery from devastating events like widespread tornadoes and severe ice storms. 

How are capital credits accumulated?

  • Margins, which are all amounts paid to SWECI in the furnishing of energy or services in excess of operating costs and expenses, are assigned back to every member who purchased electricity during that year proportionally to the amount of energy or services purchased. No special action is required on the member’s part to accumulate capital credits.

What happens to the capital credits when a membership is closed?

  • Capital credits do not automatically become payable upon disconnection of service. There are early payout options available for members who have closed all accounts with SWECI and moved offline and for estates of members who have passed away.  Otherwise, they remain on the books in the member’s name until the credits are retired in a general retirement.  Approval for all capital credit payouts rests with the board of directors.   

Does someone have to be a member for an entire year to earn capital credits?

  • No. Capital credits are calculated based upon payment for member’s monthly bills. If a member is billed for electricity for even one month, they will accumulate some capital credits, provided Southwestern Electric earns margins in that year.  Only assigned capital credits are settled.

What is the difference between allocated, assigned, and retired capital credits?

  • In a capital credit allocation, the margins for a particular fiscal year are spread proportionally among the members. The amount of funds allocated to each member’s account is based on the amount of electricity the member purchased during that year. At the close of the fiscal year, the patronage is allocated to the individual accounts.  Once the auditors approve the financial statements of the cooperative during the first half of the following year, then allocated funds are assigned to the member accounts.  The assigned capital credits are tracked in Southwestern Electric’s books under each individual membership account until they are retired, which is the process of returning or paying the assigned capital credits back to the members. Capital credits are presently disbursed to current members as bill credits or to members/estates that have moved or passed away by check. 

Is a general retirement issued every year?

  • Not necessarily. General retirements are issued at the discretion of Southwestern Electric’s board of directors. Each year, based on the cooperative’s present financial condition and other considerations, the board of directors determines whether to issue a retirement, and if so, in what amount. The cooperative began returning assigned capital credits regularly starting with a mass retirement for the years 1950 through 1974 in 2005.  Between 2006 and 2022, the cooperative issued general retirements of capital credits annually except for 2012, in keeping with a proposed 30-year cycle (i.e., capital credits accrued in 1975 were eligible for retirement in 2006; capital credits from 1976 were eligible in 2007, and so on).

Are payouts to estates handled differently from general retirements?

  • Yes. Southwestern Electric Cooperative pays out assigned capital credits to the estates upon the member’s death, which is a separate process from a general retirement. Any debt owed by the deceased member to the cooperative must be paid in full, and a representative of the estate must complete the claim process in its entirety before the disbursement may be made.  (No early retirement of capital credits is allowed in the case of dissolution of a corporation or partnership).

In the event of a member’s death, does the type of membership affect how the capital credits are paid?

  • Yes. For individual memberships, capital credits are payable to the member’s estate upon said member’s death. If the capital credits belong to a joint membership, and one of the members dies, the assigned capital credits will transfer in their entirety to the surviving member, and the membership will be converted from a joint to an individual status.  Some paperwork is required to document the change in membership status from joint to individual.

What happens when joint owners of a membership divorce or separate?

  • Capital credits are not disbursed upon divorce or separation, but credits may be reallocated in several different ways. If the capital credits are included as a marital asset in a divorce agreement, either the court or the cooperative’s bylaws will determine how the credits are handled.  Any member may choose to resign from their joint membership in favor of a new individual membership.

Do I have the right to change the type of membership?

  • Membership status may be changed—from joint to individual or from individual to joint—at the member’s discretion. It should be noted, however, that such status changes have important ramifications on a member’s voting rights and capital credits. For joint memberships, either member (but not both) may vote on behalf of the membership in the co-op’s annual election. For individual memberships, only the member listed on the account may vote.  Please consult the cooperative for the effects on capital credits.

What happens when capital credits go unclaimed?

  • SWECI makes all efforts of due diligence, in compliance with state statutes and mandated guidelines, to locate the member, and/or the member’s heirs, when capital credits go unclaimed.

    If, after such due diligence is performed, the member cannot be located, the capital credits are declared permanent equity and remain on the cooperative’s records until the member and/or heirs can be identified and found.  Please note that Illinois State statute permits electric cooperatives to use any capital credits that have remained unclaimed for more than 2 years for the benefit of the general membership of the cooperative.  (765 ILCS 1026/15-201) (Source: P.A. 102-288, eff. 8-6-21.)

How do I find out if there are any unclaimed capital credits owed to me?

  • Call the co-op’s office at (800) 637-8667, Monday through Friday, 8 a.m. – 4:30 p.m. to ask about unclaimed capital credits or check our Unclaimed Capital Credits List.

What wait until January 1, 2024, to implement the policy change for early payouts?

  • To allow members the opportunity to ask questions and become informed of the policy changes prior to their taking effect.  Also, it’s a clean start date that coincides with our fiscal calendar.

What is patronage?

  • Patronage refers to the financial support paid by members for cooperative services.

What if I had multiple accounts at the same time or over the course of several years?

  • Members with multiple accounts for different locations will receive a consolidated capital credit allocation statement and/or disbursement check grouped under the single membership number. 

Are my capital credit refunds taxable?

  • Capital credits are a return of previous years’ margins and might not be taxable unless the cost of electricity was claimed as a business expense when the capital credits were earned.  Please consult your tax professional for questions related to capital credits and income tax filings.

What if I receive a check at my address that is not mine?

  • Please write “Return to Sender” on the envelope and return it to the U.S. Postal Service.  SWECI will code the account so any future refunds for that member will not be sent to your address.

What happens when a corporation/partnership/LLC or trust is dissolved or liquidated?

  • Corporations and trusts earn capital credits just like individuals do.  However, they receive their assigned capital credits only when the board of directors declares a general retirement.  Capital credits do not become immediately payable when a corporation or trust dissolves or liquidates.  Instead, SWECI urges these commercial members to contact their attorney or tax accountant to determine their options for future general retirements.

I have a commercial account and a residential account with SWECI.  Are those capital credits being allocated and refunded separately?

  • If the commercial account was opened as a business using an Employer Identification Number (EIN), the capital credits will accumulate under that membership number.  If a second account was opened as a residential account using an individual’s social security number, the capital credits would accumulate under a different and separate membership number.  The two separate membership accounts would be tracked and refunded separately.  

What happens to capital credits when the owner of a sole proprietor business passes away?

  • When the owner of a sole proprietorship has an account and passes away, the capital credits should be payable to the estate of the deceased person owning the business.  It is important to retain your tax documents showing the business operating as an individual under an assumed business name, such as an IRS 1040 with a Schedule C.

Why did SWECI apply my capital credits to my past due or outstanding bill?

  • If you are past due on your SWECI bill or have an outstanding bill with SWECI when capital credits are returned, your capital credit refund will first be applied to your past due or outstanding balance with the cooperative.  If any money is left over after your account is brought current, it will be returned to you as a bill credit.  If you don’t have an active account, a check will be mailed to the last address we have on file.

UNCLAIMED CREDITS LIST

We make all efforts of due diligence, in compliance with state statutes and mandated guidelines, to locate the member, and/or the member’s heirs, when capital credits go unclaimed. If, after such due diligence is performed, the member cannot be located, the capital credits are declared permanent equity and remain on the cooperative’s records until the member and/or heirs can be identified and found.

We periodically publish a list of members with unclaimed capital credits. You'll find our most recent list below. You can also call the co-op’s office at (800) 637-8667, during regular business hours to see if any unclaimed credits may be owed to you.

Unclaimed Capital Credit Listings
Letter A Letter B Letter C Letters D & E
Letters F & G Letter H Letters I, J & K   Letter L
Letter M Letters N, O & P Letters Q & R Letter S
Letters T, U & V Letters W, X, Y & Z