Capital Credits

Plumas-Sierra Rural Electric Cooperative is one of 47,000 co-ops throughout the United States that furnish goods and services to around 120,000,000 people – among them are 25,000,000 electric co-op members.

An electric cooperative stands out because it is:

• Locally owned and controlled
• A true example of grassroots involvement and democracy in action
• Built on the idea that people can pool their resources to ensure reliable service and economic opportunity

Plumas-Sierra REC believes that the non-profit co-op way of providing electric service can’t be beat.

It’s the most efficient and economical way to meet common needs – a fact that hasn’t changed since 1937, when people banded together to bring electricity to the countryside.

The principles remain the same as those established for the first cooperative in Rochdale, England (1844):

• Each person has a voice and a vote
• An elected board of directors governs the co-op

Each co-op depends upon its members to provide the necessary funding or equity for operation.

The Rochdale “Principle on Financial Structure” states:

“Members contribute equitably to the capital of their cooperative and share in the results of its operation. Usually, at least a portion of a cooperative’s capital is owned collectively, intended to further the long-term purposes for which the cooperative exists.”

The program by which members contribute this equity is known as Equity Ownership or Capital Credits.

• Equity/Capital Credit ownership is the dollar value of your investment in PSREC.
• Each year, a percentage of what you pay for electricity is credited to you as capital credits (or equity).
• Your personal account reflects the total percentages credited to you over the life of your PSREC membership.

At the close of each business year, PSREC determines its net profits or margins. That amount is allocated to each member based on how much electricity they purchased compared to the total purchased by all members.

Example of how to determine net profits:

• $500,000 (year-end margin of 5%)
• $10,000,000 (total electric revenue)

If a member bought $1,000 worth of electricity, their allocation would be $50.00 (5% × $1,000).

This allocation is:

• Added to previous years’ allocations to form the accumulated total
• Reduced by any prior retirements/refunds
• Used as the basis for payment when the Board of Directors announces a capital credit refund

When the Board of Directors approves the annual Retirement of Capital Credits, you will receive a retirement check from PSREC.

• If the amount is less than the minimum check writing amount, it will be held until your balance meets the required minimum.
• The amount of the retirement depends on PSREC’s financial health.
• When a distribution is possible, each member receives a capital credit refund.

Since 1937, PSREC’s board has authorized and distributed over $2 million to current and former members – about 20% of capital credits assigned.

PSREC uses the “percentage” method, which:

• Ensures all members receive a retirement whenever a distribution is completed
• Replaces the old “first-in, first-out” standard

Checks are issued once accumulated retirements exceed the minimum check amount set by the board.

• Your equity/capital credit account is not like a bank account that earns interest.
• It reflects the value of your ownership in PSREC – your share in trucks, poles, transformers, offices, and lines.
• Paying interest would increase rates for all members.

Equity ownership is a return of some of the money you paid for electricity – not a dividend from a stock investment.

Capital credits are considered part of your assets, so legal documentation is sometimes required.

Simple corrections (provide Social Security card & driver’s license):

• Correcting spelling of your name
• Correcting or adding a middle initial
• Adding Jr./Sr. or I/II/III/IV

Other name change options:

• Adding a joint name to a current account
• Removing a joint name
• Changing a name due to marriage or divorce (include marriage license or final judgment)

Please call us to speak with a customer service representative about all required paperwork.

Mail paperwork to:
Attention: Customer Care
Plumas-Sierra Rural Electric Cooperative
73233 State Route 70
Portola, CA 96122-7069

Keep a note with your important papers for the heir(s) of your estate to contact:

Attention: Capital Credits
Plumas-Sierra Rural Electric Cooperative
73233 State Route 70
Portola, CA 96122-7069

Email Capital Credits or call our Portola office.

We will provide the necessary paperwork to transfer the account and inform them of the current policy for payment of equity ownership.

The balance remains in the account and will be distributed per policy at the time of death.

2 options for heirs:

1. Net present value lump-sum distribution — upon completion of legal verification
2. Name change for continued distributions — yearly payments made to the heir(s) of the estate

For joint accounts:

• Provide a copy of the death certificate to remove the deceased member’s name.

For individual accounts:

• Call our office to request the required documents.

Documents needed for refund of capital credits:

• Application for Patronage Refund (available by calling)
• Certified or clear copy of death certificate
• Legal proof of heirship or estate authority, such as:
• Letter of Appointment
• Letters Testamentary
• Order Determining Succession
• Decree of Distribution
• Court-approved appointment as administrator/executor

After verification, PSREC will send:

• Notice of computation of early capital account payoff
• Certification of early payout of capital credits (2 copies)

Sign and return one copy to:
Attention: Customer Care
Plumas-Sierra Rural Electric Cooperative
73233 State Route 70
Portola, CA 96122-7069

For name changes from a business to a personal account, proof of ownership is required.

Acceptable documents may include:

• Income tax return
• State license
• Articles of incorporation (Sub-chapter S or otherwise)
• Purchase or Bill of Sale

If the business owner has passed away, include:

• Death certificate
• Letters of administration or will
• Other required documentation

Mail to:
Plumas-Sierra Rural Electric Cooperative
Attention: Customer Care
73233 State Route 70
Portola, CA 96122-7069

If you move out of the PSREC service area, your equity account remains open.

• You’ll continue to receive capital credit refunds when approved.
• Smaller amounts are held until the balance meets the minimum check amount.
• Distributions depend on the co-op’s financial health.

Important: Always provide PSREC with your updated address.

• Active members continue to receive yearly equity/capital credit refund checks.
• Inactive members (after 1997) also remain eligible.
• Accounts cannot be closed in one lump sum.

All member equity forms are available by calling or emailing Capital Credits.

Mail completed paperwork to:
Attention: Capital Credits
Plumas-Sierra Rural Electric Cooperative
73233 State Route 70
Portola, CA 96122-7069