What are Capital Credits?


Capital credits are the excess revenues over and above the cost of providing electric service at the end of the year, also called patronage capital.


How does a member earn Capital Credits?

When anyone becomes a Laclede Electric member and begins purchasing electricity, they get two accounts – a billing account and a capital credit account. The capital credit account is specific to you. Regardless of how many times you move or how many billing accounts you may have, you have one capital credit account that stays with you. At the end of each year, the cooperative margins are allocated back to the members. Your share is deposited in your capital credit account for that year.

How are year-end margins allocated?

LEC takes the margins at the end of the year and divides that dollar amount by the amount of total revenue collected during the year. This is the “allocation factor.” The allocation factor is then multiplied by the amount of revenue, based on your electric usage, that you contributed during the year. This is your share of the margins or your capital credit allocation for the year.

When do I receive my Capital Credits?

Even though the Cooperative allocates capital credits to members each year, the money is not paid out right away. Instead, the equity is used to assist in meeting operating expenses and invest in distribution equipment continually. By using equity, the Cooperative borrows fewer funds from commercial lenders and maintains a reserve in case of an emergency, all of which provides rate stability.

The Board of directors looks at LEC’s financial condition annually and decides whether to retire capital credits. The goal is to completely retire the oldest years (approximately 24 years) and 5% of the margins allocated during the last three years. For example, in August 2020, the Board retired margins from 1997 and 5% of margins earned in 2017, 2018, 2019.

How do I receive my Capital Credits?

Once retirement is approved, a check will be issued and mailed to the last valid address we have on file. Checks are not issued for less than $5.00. The system will hold that money and add it to future retirements.

What if I no longer have electric service with LEC?

You must keep your address current so that the check can be mailed to your correct address. Capital credits are reserved for members even if they move out of the LEC service area.

What if the person listed on the account has become deceased?

Some folks opt to leave an account in a deceased family member’s name, but the person living at the location is paying the bill. Unfortunately, the person paying the bill does not receive the full benefits of being a member. They are not entitled to the capital credit checks or the balance of the patronage capital allocated to the person listed on the account.

Please make sure if you are paying an electric bill that the account is in your name. Capital Credits are allocated to the name listed on the account regardless of who pays the bill.

Estate payouts to spouses or heirs of a deceased member can be retired early at discounted net present value. A person would not receive the money at full value because it is being retired much earlier than usual. 

If you have questions regarding Capital Credits or need to make a name change on your account, please get in touch with us at 1-800-299-3164.