Capital Credits Cooperatives aren’t like for-profit companies that are owned by investors. As a member of New Hampshire Electric Cooperative (NHEC), you aren’t just a customer, you’re also a part-owner of your Co-op. This means that you get to vote on who will represent you on the Co-op’s Board of Directors and when the Co-op “earns a profit” you are allocated a portion of that equity. This equity is first used to fund capital projects to keep our distribution system safe and reliable, but it will be returned to our members as the Co-op’s finances allow. Members’ equity in NHEC is represented by Capital Credits. Resources Capital Credit Address Verification Form 2023 Pre-Retirement Form (Former Members) ABOUT CAPITAL CREDITS What are capital credits? Capital credits are NHEC members’ portion of equity in their Co-op. Co-op members are allocated capital credits when NHEC collects more money through its distribution rates than it spends each year. This difference would be considered profit in a traditional, for-profit business, and is also referred to as “margins.” These margins are first used to fund needed investments to NHEC’s distribution system and keep electric rates affordable, but will eventually be returned to the members who paid the rates. Who will receive capital credit payments in 2023? Current members who received service from NHEC in part of 1984, 1985 and part of 1986 will receive a bill credit on their July 2023 bills. Former NHEC members who received service during those years will receive checks based upon their portion of equity accrued. When did NHEC begin returning capital credits to members? Current and past members received their first capital credit payments in July 2021. Each year NHEC’s Board of Directors will review the Co-op’s finances to determine if NHEC is in a good position to return capital credits. The Board will vote to continue returning capital credits if it can be done without causing financial harm to the business. How are capital credits allocated to members? After the end of the year, if NHEC has a positive margin, capital credits are allocated to members based upon their share of the distribution revenue they paid to the Co-op. The more a member contributes to the distribution system in a year through rates, the larger their capital credit allocation is for that year. How are members’ capital credits tracked? When new members sign up for service with NHEC, two accounts are created in their name: a billing account and a capital credit account. The capital credit account is specific to you and your spouse, if married, and both names are on the account. Regardless of how many times you move, or how many billing accounts you may have with NHEC, you have one capital credit account that stays with you. At the end of each year, NHEC’s margins are allocated back to the members. Your share is tracked in your capital credit account for that year. Why doesn’t NHEC lower rates instead of returning capital credits? NHEC must return capital credits to the members who paid the rates that created them. If NHEC decreased rates instead of returning capital credits, past members would not receive the capital credits they were owed, which would not be equitable. Listen to our Telephone Town Hall Meeting on Capital Credits YOUR CAPITAL CREDITS How and when will I receive my capital credit refund? You can see the amount of your capital credit refund on your July 2023 bill under SUMMARY OF CHARGES (see sample image). Can I donate my capital credit payment? Yes! Fill out the form here BEFORE JUNE 29, 2023 and NHEC will donate your capital credit payment automatically to your choice of the NHEC Foundation or Project Care, or a combination of both. Both beneficiaries are nonprofit 501(c)(3) organizations that provide assistance to local nonprofit community groups, as well as Co-op members who are having difficulty paying their bills due to an emergency. **PLEASE NOTE: if you choose to donate, we will continue to donate any future capital credit refunds you may receive unless you notify NHEC otherwise at email@example.com, or (800) 698-2007. What determines the amount of my capital credit refund? Each year, the board of directors approves a methodology for refunding capital credits that determines how these refunds are to be paid to current and former members. The amount of money members receive is based on how much was allocated to them during the year or years that are being refunded. In 2023, the NHEC Board voted to return more than $2 million worth of capital credits to past and current members who received service during part of 1984, 1985 and part of 1986. Why can’t my capital credit allocations be refunded to me all at once? Capital credits cannot be returned to members all at once because doing so would negatively impact the Co-op’s finances and cause sharp increases in electric rates. Capital credit funds are used to keep the electric system safe and reliable and keep electric rates as affordable as possible. When NHEC’s finances permit, capital credits are returned to the members who paid the rates that created them. Are my capital credit refunds taxable? Capital credits are a return of previous years’ margins and are not taxable unless electricity is claimed as a business expense. However, please consult a tax professional for questions related to income tax filings. What happens to my capital credits if I move out of the Co-op’s service area? Your capital credit allocation balance remains in your name, even if you are no longer a member, until the Board of Directors approve a general retirement for the years that you received service. That’s why it’s important to let NHEC know your current address so we can notify you when NHEC returns capital credits. What happens to the capital credits of a deceased member? In the event a member or former member dies, the capital credits in the member’s account become a part of the estate. In order for the capital credits to be properly refunded, a beneficiary must present two items: 1) Proof of death such as a death certificate or obituary; 2) A will naming the beneficiaries or copy of probate judgment. This is to first verify that the member is deceased and second to determine who is eligible to claim the member’s capital credits. What if I am past due on my NHEC bill when capital credits are returned to members? If you are past due on your NHEC bill when capital credits are returned to members, your capital credit refund will first be applied to your past due balance with the Co-op. If any money is left over after your past due amount is paid in full, it will be returned to you as a bill credit. What if I receive a check that is not mine? Please write “Return to Sender” on the envelope and remit it to the U.S. Postal Service. NHEC will code the account so that future refunds for this member will not be sent to your address. INFO FOR BUSINESSES Can a business or trust earn capital credits? All members of the cooperative earn capital credits whether it be a person, trust or a business. Capital credits are allocated to entities in the same manner as they are to a natural person. Refunded capital credits may or may not be taxable based on the member treatment of the prior payments of electrical service on their tax returns. However, as we cannot give tax advice and each entity’s situation is different, we encourage you to contact your tax advisor if you have a specific question. What happens when a corporation/partnership or trust is dissolved or liquidated? Corporations, partnerships and trusts receive refunds of their allocated capital credits when the board of directors authorizes a general retirement. When a corporation, partnership or trust decides to dissolve or liquidate its assets, capital credits are not payable at this time. Members will need to contact their attorney or tax accountant to determine their options for assigning the capital credit assets for future general retirements. I have a Commercial account and a Residential account with NHEC. Are those capital credits being allocated and refunded separately? Your capital credits are allocated and tracked with the capital credit number that the account was opened under. It is possible for both residential and commercial services to be opened under the same capital credit number and the capital credits for both accounts would be tracked together. If an account was opened as a business under an Employer Identification Number, the capital credits would be tracked separately from an account opened under an individual’s Social Security Number. What happens to capital credits when the owner of a sole proprietor business passes away? When the owner of a business who is operating as an individual under an assumed business name passes away, the capital credits may be payable to the estate of the deceased natural 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 the Schedule C.