Capital Credits


Capital Credits – Frequently Asked Questions:

What are Capital Credits?
Capital credits may also be referred to as “patronage capital”. Each year’s margins are allocated to Members based on the amount billed per Member for electric purchases and the associated margin during that year. This allocation is credited to a Capital Credit account maintained for each Member until the credits are retired (paid).

Can my Capital Credit allocation be applied to my current energy bill?
No. Your Capital Credit allocations for this year are new credits allocated to a Capital Credit account maintained in your name. Allocations are used as the operating capital of NEC. They are not available until a percentage is retired and refunded back to you as NEC’s financial condition warrants and the Board approves.

What does it mean to be a Member?
As a Member of NEC, you build ownership in NEC through your kilowatt-hour purchases. There is no stock to be purchased or sold; you own the business.

What’s the difference between an allocation and a retirement?
Allocations are made annually for each member, based upon the amount of electricity purchased the previous year; these allocations are set aside into a separate account to be used as operating capital for safety and reliability improvements over a period of years. A retirement is payment of capital credits that have been previously allocated.

Why do I have to wait to receive payment of my capital credits?
After the margins have been allocated, the funds are then used as capital by NEC to build and maintain the electric infrastructure used to deliver power to each Member, improving the safety and reliability of your electric service. This maintenance includes upgrading poles, wire, transformers & substations, increasing capacity and improving reliability. NEC’s Board of Directors will retire patronage capital when the NEC’s financial position meets the guidelines set by our lender.

What happens to my Capital Credits if I move and terminate service with NEC?
Your existing Capital Credit balance will be maintained in a Capital Credit account in your name until it is retired (paid) in full. Maintaining a correct mailing address with NEC for the receipt of any future payments or information concerning your Capital Credits is your responsibility.

What if I pass away before my Capital Credits are paid out?
Your capital credits will transfer to your estate. If the capital credits were allocated to a joint account, and one spouse dies, the surviving member may receive payment of the discounted capital credits, after completing the necessary paperwork. If you are the sole member, the discounted capital credits will be paid to your estate, after the necessary paperwork is received from your estate’s executor.

Why can’t my capital credit allocations be refunded to me all at once?
Capital Credit funds are used for reliability improvements and maintenance and these are long term investments. Capital Credits cannot be refunded all at once because they help NEC remain financially sound, thereby ensuring a stable, reliable electric service for the benefit of the members we serve.

How are my Capital Credit allocations used until I receive them?
Capital Credit allocations are pooled together and used as operating capital so that we can serve our members with reliable power. These funds pay for a portion of the power reliability improvement and maintenance such as replacing power lines or building substations.

When do you pay (or retire) Capital Credits?
25 years after the initial allocation and when NEC’s management and Board of Directors has determined the financial condition allows a retirement of Capital Credits, the Board of Directors can approve a general retirement of the Capital Credit funds to be retired (or paid) to the membership.

How will I receive my Capital Credit payment?
Any amounts owed to a member greater than $10.00 (after applying any amounts owed to any past due amount) will be issued via check.

How do I complete a legal name change on my account?
• Call 1-928-368-5118 and Request a Member Care Specialist mail or email you the required forms. You will need to sign, have notarized and supply the required proof instructed to you by the Specialist
• Stop by an NEC office for assistance

How can I update my mailing address so I receive any future capital credit refunds? Members can send the updated mailing information via email to capitalcredits@navopache.org or by calling 928-368-1345. A Member Care Specialist will follow up to verify the requested changes within 2 business days.

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