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Capital Credits

When you signed up to receive electric service from Choptank Electric, you became a member of an electric utility. While investor-owned utilities return a portion of any profits back to their shareholders, electric co-ops operate on an at-cost basis. Choptank Electric allocates and periodically retires capital credits to its members based on how much electricity the member purchased during a year.

The Choptank Electric Cooperative Board of Directors voted to return more than $2.1 million to our members in December 2013, a record amount, according to Olin S. Davis III, chairman of the board of directors.

These capital credits will be paid to longtime members who have capital credits owed them from 1986 and 1987, reflecting their contribution of capital to, and ownership of, the cooperative during those years. Those to receive $30 or more will be mailed checks in mid-December; amounts less than $30 will be credited to electric bills in December. "That may seem like a long time ago," said Mr. Davis, "however, those funds helped us keep rates in check, reduced the amount of money we needed to borrow from outside lenders to build, maintain, and expand a reliable electric distribution system, and covered emergency expenses."

An electric cooperative operates on an at-cost basis by annually "allocating" to each member, based upon the member's purchase of electricity, operating revenue remaining at the end of the year; later, as financial condition permits, these allocated amounts — capital credits — are retired. Capital credits represent the most significant source of equity for Choptank Electric.

"Since a cooperative's members are also the people the co-op serves, capital credits reflect each member's ownership in, and contribution of capital to, the cooperative. This differs from dividends investor-owned utilities pay shareholders, who may or may not be customers of the utility," said Mr. Davis.

Each year, the Choptank Electric Board of Directors makes a decision on whether to retire capital credits based on the financial health of the cooperative. The co-op's ability to retire capital credits reflects the cooperative's strength and financial stability. The board alone decides whether to retire capital credits.

Choptank Electric has paid $8.2 million in capital credits retirements to current and former members since 2003.

"Allocating and retiring excess revenue to members helps distinguish cooperatives," said Mr. Davis. "We're proud to support our communities by putting money back into the local economy-and into the pockets of those we serve. It makes our business model special."


What are capital credits?
Choptank Electric is an electric cooperative, owned by the members we serve. As a not-for-profit entity, any revenues remaining over and above the cost of doing business are considered as margins or "capital credits." When Choptank's board of directors deems it appropriate, capital credits are then returned to you, our member/owners.

How do I participate in capital credit refunds?
Your membership with Choptank Electric activates your capital credit account and no additional action on your part is required. Capital credits are calculated for every member who purchased electricity during a year in which the cooperative earned margins.

Will I receive a yearly notification of capital credits earned?
Yes. Information concerning that notification will be printed in an issue of the "Live Wire," Choptank's monthly member newsletter. If you are an active member, it will advise you which month you will find a message printed on your billing statement showing your previous year's capital credit allocation. If you are an inactive member, you will be mailed a separate notice.

How are capital credit refunds calculated?
The amount of capital credits you earn in a given year is based upon the amount of electricity purchased. Each member receives a credit based on a percentage for each dollar of electricity purchased.

Will I receive a capital credit refund each year?
Not necessarily. The Choptank Electric Cooperative Board of Directors will analyze the financial health of the cooperative and will not authorize a refund if it is not in the best interest of the membership.

How and when will I receive my refund?
When a capital credit retirement is approved, depending on the amount of your individual refund, you will either receive a credit on your billing statement in the month selected for the refund, or you will be mailed a check.

What happens to my capital credit refund if I am no longer a Choptank Electric member?
Your capital credits remain in your name until they are retired and it is important that you ensure Choptank Electric has your current address so that a check can be mailed to you.

What happens to the capital credits when the member is deceased?
Upon the death of a member, capital credits are refunded to that member's estate.

Do we owe you (or someone you know) money?

If you or someone you know are on this list, please call 1-877-892-0001 ext. 8573 (toll free) or email with the following information: the name in the listing and a current name if the name if the listing has changed. If it is your name, include your past and current mailing address and the last four digits of your Social Security number. If it is the name of someone you know include any contact information you might have for that individual along with your name and contact information. Thank you.

Choptank Electric Cooperative, Inc., P.O. Box 430, Denton MD 21629 Toll Free: 877-892-0001

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