Capital Credits

Unclaimed Capital Credits—Are We Holding Your Money???

We have checks not cashed from previous capital credit retirements. Please check to see if your name appears on the Unclaimed Capital Credits list, then call the BEC office at 406-446-2310 to check and make your claim.
Capital Credits—A Powerful Return on Your Investment

When you signed up with the Beartooth Electric Cooperative (BEC) to receive electric service, you became a member-owner of BEC. A capital credit account was established in your name, and BEC uses this to record your investment in the Cooperative.
Your Cooperative is a not-for-profit. We do not exist to make money for shareholders – we exist only to provide low-cost, reliable electricity to our members.
One benefit of being a member of a not-for-profit co-op is that excess revenue is returned to you as capital credits. How does that work?
• Money comes in from members when they pay their electric bills. Electric bills can be considered each member’s fair share of the funds needed for their cooperative to run.
• Money goes out to pay Co-op expenses.
Members’ dollars are pooled together and used as operating capital so that the Co-op can provide reliable service and pay Co-op expenses.
• When the financial condition of the Co-op allows, capital credits are retired (paid) to each member in the form of a check, typically just in time for the holiday season.
This year, your Board of Trustees has authorized the retirement of capital credits (also known as patronage capital) totaling $444,550.00, representing the remaining 79% of the year 2001 and 12% of 2002. If you were a BEC member during those years and purchased electricity, you will receive a check. Great News! Checks are in the mail right now!
Please note, as capital credits may not be retired for several years from the time of allocation (BEC has implemented a 20-year rotation), it is important that you keep the Cooperative informed of your current address.
Special Provisions
A special provision refunds capital credits to the estates of members who pass away at a discounted lump sum amount.
Unclaimed Capital Credits
Unclaimed Capital Credits are Capital credit retirement checks mailed and returned to Beartooth Electric or otherwise gone uncashed. Unclaimed Capital Credits remain in the member or previous member’s account for a period of five years when in accordance with Montana Code Annotated 35.18.316., the funds may be turned over to the state, or used by BEC for educational purposes. BEC uses the funds for educational purposes including the Washington D. C. Youth Tour, BEC Leadership Scholarships, Solar my School, etc.
Note: If you move, make sure to give your new address to Beartooth Electric, so we can continue to refund any monies you are eligible to receive.
We have checks not cashed from previous capital credit retirements. Please check to see if your name appears on the Unclaimed Capital Credits list on our website Call the BEC office at 406-446-2310 to make a claim.

Captial Credit Frequently Asked Questions (FAQs)

What are capital credits?

Capital credits represent each member’s ownership of the cooperative. They are the margins credited (or allocated) to the members of the cooperative based on their purchases from the cooperative. These margins are used by the cooperative as capital to operate the business for a period of time.

What capital credits are not:

Capital credits should not be confused with profits, which are a return on capital. Retirement of capital credits is a return of member-furnished capital. Cooperatives exist not to make a profit but to provide low-cost electricity.

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. An allocation is the amount set aside into a separate account for the cooperative to use as operating capital for reliability improvements and maintenance over a period of years. Your allocation notice will be mailed to you usually during the month of April.

A retirement is the amount you receive back as a capital credit refund. It is a percentage of your total capital credit balance. The percentage to retire is decided by the board of trustees annually, based upon the financial condition of the cooperative permits, determined by the Board, and as BEC bylaw and policy provisions are met, and according to Rural Utilities Service (RUS), and BEC lender regulations of the cooperative. 

Can I use my capital credit allocation to pay on my bill?
No. Allocations are used as the operating capital of the cooperative. They are not available until a percentage is retired and refunded back to you as the Cooperative’s financial condition warrants and the board of trustees approves. 
Why can’t my capital credit allocations be refunded to me all at once?
Remember that 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 the cooperative 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 power reliability improvements and maintenance such as replacing power lines or building substations.  If we refunded the total amount of allocations, we would have to borrow that amount of money in order to continue operating. Having operating capital helps the cooperative minimize the amount of high-interest money it must borrow, which in turn helps lower member’s costs by stabilizing rates. 
When do you refund (or retire) capital credits?
When the board of trustees has determined the financial condition allows a retirement of capital credits, the board can approve a certain percentage of the capital credit funds to be retired (or refunded) to the membership.
How will I receive my capital credit refund?
A check will be mailed to you, usually during the month of November. 
Why do you use a capital credits system?
Cooperatives operate on a set of seven ethical principles that include a self-supporting system of operations. This system calls for a portion of any funds left over at the end of the year after all expenses are covered to be allocated to those who used and paid for their services, the member-owners. Capital credit allocations help a cooperative qualify for cooperative status under federal income tax law, which reduces cost to the member-owners. Furthermore, the capital credits system of allocations and refunds helps keep member’s rates lower by reducing the amount of the cooperative’s debt. 
What happens to my capital credits if I move?
Capital credits cannot be refunded when you move because they are used for long term investments and operating the cooperative to provide reliable service to its members. Because capital credit retirements are paid a number of years after the credits are earned and allocated to your account, always keep the cooperative informed of any address and telephone changes. 
What happens to the capital credits of a deceased member?
In the event a member dies, the capital credits in the member’s account become a part of the estate. In order to assist the member’s heirs or beneficiaries in closing the estate, the capital credits are retired. Upon request by the personal representative of the estate, or the heirs of a deceased member where no personal representative has been appointed, the cooperative will provide a listing of the documentation required to retire the account. 
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. It all depends on how the membership is opened at the cooperative. 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 to capital credits when the owner of a sole proprietor business passes away?
When the owner of a business 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.