What are capital credits?
Money back to you from the co-op
If you get your power from Bluebonnet, you are not just a customer. You are a member of the cooperative.
Every year, Bluebonnet returns money to its members. This is similar to a dividend, which for-profit businesses pay to their investors.
Bluebonnet’s “dividends” are called capital credits. In the last five years, Bluebonnet has returned more than $18.7 million in capital credits to its members.
Have questions? Perhaps you can find an answer here.
1. Why does Bluebonnet pay capital credits to members?
Bluebonnet Electric Cooperative is a nonprofit, member-owned business. Unlike private, for-profit businesses that pay shareholders a dividend, Bluebonnet shares its excess revenue – money it collects above what it takes to run the business each year – with its members.
2. Who gets a capital credit?
Everyone who buys, or has bought, electricity from Bluebonnet.
3. How is it paid?
Active members get the credit on their May electric bill; former members who are owed a capital credit receive a check, usually in June. It is important for former members to keep Bluebonnet informed about their current address so the co-op can pay them their capital credits. To update your address or for more information call a member service representative at 800-842-7708.
4. Who decides how much I get?
Bluebonnet’s board of directors decides how much to pay based on the need to keep electric rates as low as possible, to keep the co-op financially strong and pay outstanding capital credit balances in a reasonable period of time.
5. How much will I get?
It varies from member to member and year to year. Between 2008 and 2012, the average capital credit payment was $16.
6. Why do I get a capital credit if I am no longer a co-op member?
The co-op pays each member’s capital credits balance over several years. Generally, members can expect their capital credit balance to be paid out over a 30-year period, which coincides with the life of most assets, including wires, poles, substations and buildings.
7. What if I have more than one meter?
You receive a capital credit for each meter on your account.
8. Can I cash out or redeem all of the capital credits owed to me?
No. Members cannot cash out their capital credits balances because Bluebonnet needs to invest that money into the co-op. Investing that money into the co-op, rather than borrowing and paying interest, helps to keep rates as low as possible.
9. Do I earn interest on my capital credits?
No. Bluebonnet uses the money Bluebonnet members pay in electric rates to purchase the equipment necessary to provide safe, reliable electricity. Bluebonnet would have to raise electric rates in order to cover the cost of paying interest on the amount each member is owed in capital credits.
10. Can I transfer capital credits to another person?
No, capital credits must be paid to the person or business that has or had the account with Bluebonnet.
11. How are capital credits paid to businesses?
Businesses earn capital credits just like residential members. The amount a business earns in capital credits is based on the amount of electricity it purchased per year.
12. What happens if a deceased member is still owed capital credits?
If a member is still owed capital credits at the time of his or her death, the capital credits go to the estate of the deceased member.
13. Do I have to pay taxes on my capital credits?
You do not normally have to pay taxes on your capital credits, but capital credits returned to businesses may be taxable. It is important for you to ask your financial advisor, your accountant or the Internal Revenue Service to be sure of your tax liability.
14. I still have questions. Who can help?
Bluebonnet’s member service representatives are available at member service centers in Bastrop, Brenham, Giddings, Lockhart or Manor. You also can call 800-842-7708 or email email@example.com.