Capital Credits

The Cooperative Difference

At our Cooperative, members are a part of something special. Our members collectively own Sioux Valley Energy and enjoy several benefits unique to cooperatives. Capital credits are fundamental to the cooperative business model and a financial benefit our members enjoy.

Because SVE is a not-for-profit cooperative, owned by its members, it doesn’t technically earn profits. If revenues exceed expenses, the co-op earns “margins.” Each year, margins are assigned to you, as capital credits, in proportion to the amount you are billed for electricity during that year. These “capital credits” reflect your ownership in SVE but are not automatically returned to you. The Cooperative uses capital credits to fund operating activities and reduce borrowing, with the intent of paying this capital to you in later years.

After reviewing the Cooperative’s finances each year, the Board of Directors determines whether a portion of capital credits can be retired, or paid, to members. The Board also evaluates the method, basis, priority, and timing of all capital credits retirements. Because capital credits are based on the dollar amount of electricity a member purchases, the retirement amount will vary from member to member and from year to year.

The Cooperative's Bylaws serve as a guide for capital credits allocations and retirements. If you have questions about the capital credits allocated to your account, you can call us toll-free at 1-800-234-1960 and someone will be happy to answer your questions.


How are capital credits calculated?
The amount of capital credits you earn in a given year is based on the amount of capital you contribute to the Cooperative through payment of your monthly electric bills and the amount of operating margins realized by the Cooperative. Basically, the more electricity you use, the greater your ownership in SVE, and the larger your capital credits al­location will be.

Is every member’s distribution the same?
No, each member’s distribution varies based on the dollar amount of electricity a member purchased.

Do I have to be a member for an entire year to earn capital credits?
Capital credits are calculated based on the amount you are billed for electricity. If you are billed for service for even one month, you will accumulate some capital credits if SVE earned margins during the year.

What do I have to do to start accumulating capital credits?
Your membership in SVE automatically activates your capital credits account. SVE allocates and retires capital credits for you and provides you with notice of these processes.

How often will I receive an allocation notice?
You should receive an allocation notice annually after the financials for the previous year have been audited and the Cooperative’s books have been closed.

What’s the difference between allocated and retired capital credits?
Allocated capital credits appear as an entry on the permanent financial records of the Cooperative and reflect your ownership in SVE. When capital credits are retired, a check or bill credit is issued to you, and your ownership in the Cooperative is reduced. After reviewing the Cooperative’s finances, the Board of Directors determines the method, basis, priority, and timing of all capital credits retirements.

Can I receive my cumulative capital credits allocation now?
Cumulative capital credits allocations are simply a record of your ownership in the Cooperative. Because the capital is not held in an account and is reinvested to support operating activities, the entire balance cannot be retired to you at once.

Can I use the capital credits that have been allocated to me to pay my electric bill?
Because capital credits have no cash value until the Board of Directors calls for the retirement of a previous year’s allocated capital credits, they can’t be used to pay your current bill. Your electric bill is due now, but you may not be entitled to receive your capital credits for many years.

What happens to my capital credits when I leave the Co-op?
Your capital credits remain on the books in your name and account number until they are retired. Because payments are made years after capital credits have been allocated, you should be sure that we always have your current mailing address. We may retire capital credits, outside the normal schedule for retirements, when the Co-op receives proper notification that a member or former member is deceased. Contact a customer service representative at 1-800-234-1960 to update your address.

When will my capital credits be retired?
When determined by the Board of Directors, capital credits will be retired to the following groups:

  1. The estates of deceased members.
  2. The oldest outstanding year(s) that have not yet been retired.
  3. The most recent year(s) that have been allocated.

I am no longer with the Co‐op and accumulated capital credits. My distribution is less than $25. What happens to my capital credits?
In order to limit the administrative costs related to distributing capital credits, SVE does not automatically send checks to former members with a capital credits distribution of less than $25. Those credits will remain on SVE’s books as unissued capital credits. Former members with additional allocations will receive a capital credits check once the allocation increases the distribution total to $25 or greater.

What will happen to my capital credits if I pass away before they are eligible for distribution?
When SVE receives proper documentation to settle the estate of a current or former member who has passed away, the Co‐op will distribute capital credits in accordance with our Capital Credits Policy. SVE discounts the value of these credits using the present value of each year’s distribution compared to the expected payout of 25 years from when the capital credits were accumulated.

My capital credits distribution is larger than my December bill. Do I still get those credits?
Yes, if your capital credits distribution bill credit is larger than the total of your December bill, any remaining credits will roll over onto your January bill.

Can I receive my distribution as a check instead of a bill credit?
No, all current members are receiving their distributions as bill credits. SVE is committed to pursuing the most cost-effective business practices. The Cooperative saves a considerable amount of money by distributing capital credits as bill credits as opposed to the expense of printing and mailing checks to more than 25,000 current members.

If you are a family member of a current or former member who has passed away, you and remaining heirs may be eligible to receive a discounted payment as an Estate Retirement (“natural person” only; not business).

The Application for Descendent Patron's Capital Credits needs to be completed, notarized and returned to our office with the supporting documents. One of the following is necessary:

  • If you are the court-appointed administrator: application form completed signed and notarized, and a copy of personal representative document (note: a trust is not a legal representative of an estate - and neither is a copy of a will)
  • If you are the spouse: application form completed signed and notarized, and a copy of the death certificate
  • If you are the deceased member’s child/children: application form completed by proposed payee, signed and notarized, all heirs need to sign on the bottom back of the application (do not need notary on these), and a copy of the death certificate
  • If none of the above apply: application form completed and notarized by proposed payee, a copy of the death certificate and a “small estate affidavit” must be filled out and notarized (this certifies that you are entitled to make the claim for payment). A copy of the small estate affidavit is available upon request.

Note: Attach a copy of the POA (Power of Attorney) papers only if you are signing on behalf of the person requesting the payout. POA papers are not a document to be used in lieu of Personal Representative Papers or a death certificate.

When we have the completed application and supporting documents it will be presented at the next scheduled Board of Directors’ meeting for approval and subsequent payment. If you have any questions please feel free to call Kathy at 800-234-1960 ext 1654.

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