As a non-profit electric cooperative, Southwest Texas Electric Cooperative allocates our annual operating margins, or profits, to members receiving service during the year. These margins (revenue in excess of expenses) are allocated using a proportional ratio (using the dollar amount of electric service that each member purchases in a year compared to the total electric service purchased by all members) and are called capital credits. They are used by Southwest Texas Electric Cooperative for operating funds and paid back to our members as the financial condition of the cooperative permits and as bylaw provisions are met.
If you cease service with Southwest Texas Electric Cooperative, please keep us informed of your address in future years. This will enable us to forward payment when the capital credits are refunded for the year or years of your membership.
Frequently Asked Questions
The difference between a cooperative such as Southwest Texas Electric Cooperative and an investor-owned utility is that a cooperative is owned by the member-customers it serves. As a member-owner, you share in the profits of the co-op. At the close of each fiscal year, all revenue received in excess of expenses (i.e. margins) is allocated back to the membership in the form of capital credits. This allocation is based on the dollar amount of electricity purchased during the same year
You need to know two things about capital credits in order to understand how they work for you:
1. Allocations: Each year, you are "allocated" your portion of the previous year's margin based on the amount of electricity you purchased from Southwest Texas Electric Cooperative (SWTEC) in relation to the total amount of electricity purchased by all members during the year. This amount is put into a "holding account" for a number of years and used by SWTEC to fund capital needs related to your service such as power line construction, transformers, trucks, inventory and other equipment. This is an underlying principle of the cooperative business model and is one more way we keep your electric rates as low as possible. This "allocation" becomes your equity in the cooperative and is maintained in a separate account assigned to you.
2. Retirement: This is what you will get in cash at a later date. SWTEC uses the amount "allocated" to you for a time, but then returns this amount to members in the form of "retirements," which are actual "cash back" dollars to you.
Per cooperative bylaws, your locally elected Board of Directors determines the amount of retirement (cash back) each year, based on the financial condition of the cooperative and other considerations. These payments are usually made in December in the form of checks or bill credits.
For individuals, capital credits are generally not taxable. We suggest you seek the advice of a tax professional for any specific questions.
The member should inform our office of any changes in his or her mailing address. It is a member's responsibility to make sure the cooperative has up-to-date address information at all times. Each year, hundreds of refund checks are returned to the cooperative with invalid addresses. SWTEC can be contacted by phone, fax, or email to update an address.
Eventually, if SWTEC cannot return the funds to the member, SWTEC must give these "escheated" capital credits to the state comptroller.
Southwest Texas Electric bylaws provide for the option of an early retirement of the capital credits of a deceased member to his or her estate (No early retirement of capital credits is allowed in the case of dissolution of a corporation or partnership). Representatives of a deceased member's estate can choose whether to receive the deceased member's capital credits in the form of a present valued lump sum payout or to wait and receive the monies as they are retired as part of the normal, non-discounted retirement process of the cooperative. To find the dollar amount of the discounted estate retirement, the executor of the estate must contact the cooperative. When ready to make an election regarding the deceased member's estate, the executor of the estate will:
Gather certified copies of supporting documents below
Death Certificate, and
One of the following:
Order admitting will to probate
Small estate affidavit
Return completed and notarized waiver, along with supporting documentation, to: Southwest Texas Electric Cooperative, 101 East Gillis, Eldorado, Texas 76936
If you wish to have SWTEC personnel notarize the release (free), please call ahead to ensure that a notary public will be available. The completed Release and Waiver and a copy of the death certificate are needed to complete the capital credit transfer or estate retirement.
What happens if both original members are deceased?
The executor of the estate must contact the cooperative and follow the same steps as above to claim the capital credits.
Each member has a separate capital credit account, which represents the member's ownership in the cooperative. When capital credits are allocated at the end of a year, all members who received electric service during that year will receive an allocation notice showing their current year's allocation and the outstanding balance of all year's service.
Additionally, each member's un-retired capital credit balance can be viewed online using SWTEC's ebill system, a secure web site that allows members to view current and historical bills, graphically track usage, pay a bill, change an address, and many other features. If you are not currently signed up for ebill, signup online today.
Upon the death of either spouse in a joint membership, the name of the deceased person is removed from the membership and the membership is then held solely by the surviving spouse. A joint membership is eligible for an early discounted estate retirement upon the death of one of its members.. A copy of the death certificate is required.