Capital Credits

Your Socorro Electric Cooperative (SEC) is a nonprofit organization. Any revenue above the cost of doing business is considered "margins." These margins represent an interest-free loan of operating capital by the membership to the cooperative. This capital allows SEC to finance operating costs and expenses, with the intent that excess capital will be repaid to the members in later years through capital credits. Capital credits are an important part of SEC's business model and are just one of the things that makes the cooperative different than many other utilities.

A: Capital credits represent a member's share of the cooperative's margins during the time they have a membership. No special action is required to start a capital credit account. The membership with SEC activates the automatic calculation of the credit.

A: The amount of capital credits earned by any given member in a given year is based on the amount of the member’s monthly electric bills.

A: The amount of the capital credit depends on the amount of the member's monthly bill, minus the total cost of power required to deliver the power and energy to the member during that time frame.

A: Allocated capital credits appear as an entry on the permanent financial records of the cooperative and reflect a member's equity in SEC. When the Board of Trustees votes and approves to retire capital credits, that money is distributed back to the membership who were members during the time frame being retired.  The Board of Trustees reviews the cooperative's financial stability annually and decides when to retire capital credits.

A: Members that received electricity from SEC during the time period being retired will be mailed checks if the amount is more than $5. Inactive accounts with distributions of less than $5 will rollover to future years and a check will be issued when the minimum amount is reached.

A: A member who terminates service no longer receives capital credit allocations. The balance in the member's capital credit account is maintained until the cooperative begins retirements that affect that account. Payments are often made around 25 years after they are earned, so it is important that members make sure SEC always has a current mailing address. You can also choose to donate future capital credit retirements to SEC Foundation. Contact our office if you are interested in that option.

A: If a member passes away, their estate does have the option of settling their capital credits early or of waiting for retirements of their allocated capital credits. You can read about your options in the event of a member death here.