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Explanation of Capital Credits

As a member of Central Texas Electric Co-op (CTEC), when you pay your electric bill, you help to provide the funding to build and maintain the electric distribution system that is used to deliver electricity to co-op members.  As a not-for-profit cooperative, funds not used to pay for wholesale power and other operating expenses are invested in our system.  The revenues over and above the cost of doing business are considered "margins".  These margins are an interest-free loan of operating capital by the membership to the co-op.  This capital allows CTEC to finance operations and construction, with the intent that such capital will be repaid to you in later years.


Each member’s share of capital is referred to as patronage capital or capital credits.  Your capital credits reflect your portion of the margins earned by the co-op. CTEC allocates margins to all members each year that a positive margin is earned. This means that an entry is made on the permanent financial records of the co-op that reflects your equity or ownership in CTEC. You are notified of the amount of this allocation when it is made, by a notation on your bill. Patrons without active service will receive notice of their allocation amount by mail.


Eventually, the capital credits that have been allocated will be returned to the members in the form of a bill credit on their electric bill or a capital credit check. Because the margins earned by the co-op are relatively small, it takes up to thirty years before capital credits allocated in a given year are returned or retired. CTEC’s bylaws establish a process for returning capital credits that emphasizes payout of the oldest unretired capital credits. The process also returns a larger share of capital to those members who have paid larger bills and contributed more capital over the years.


The capital credit retirement process involves several steps. First, the CTEC Board of Directors determines the amount of capital to be retired each year. The board may only retire capital credits when doing so will not impair the financial condition of the co-op.


After the retirement amount has been determined, one-half of the authorized retirement amount is applied against the oldest unretired capital credits on the co-op’s books. The remaining half of the retirement amount is then determined on a pro-rata basis, based upon each member’s percentage share of the total outstanding capital credit balances of all members. In other words, if a member owns one percent of the unretired capital credits on the books of the co-op, he would receive one percent of the capital credits retired in this fashion. After the dollar amount of each member’s refund is determined, it is applied to reduce his oldest unretired capital credits on record.


For members with active accounts, keeping track of capital credits is as simple as reviewing your electric bill. The amount of capital credits allocated to your account is listed on your bill each year following the allocation by the board of directors. When capital credits are retired, you receive a bill credit in the amount of your retirement reflected on your billing statement. Patrons who no longer have active accounts receive allocation notices and retirement checks by mail. Unfortunately, many former members miss out on these communications because they have not provided the co-op with a current address. Every year, thousands of dollars in capital credit retirements are unclaimed. Eventually, these unclaimed funds are transferred to the State of Texas.  The forfeiture of these accounts could be avoided simply by keeping the co-op informed of address changes.


Capital credits also require attention when a member or patron passes away. The representative of the deceased person should provide the co-op with a death certificate and Letters Testamentary, or other evidence of the representative’s authority to handle the decedent’s affairs. Upon receipt of this documentation, CTEC will change the account name to the name of the estate. At this time, the representative may choose

from several options:

  • The account may remain in the name of the estate.
  • The account may be paid in full through an Estate Retirement. An Estate Retirement is the retirement of the total unretired capital credit balance using a present value calculation. The discount rate used is the Prime Rate, as quoted by the Wall Street Journal, on the first business day in January of each year, plus 4%.
  • The account may be assigned to an individual, entity or charitable organization. If this option is chosen the estate retirement option is no longer available in the future.
  • The account may be combined with that of another individual or entity. If this option is chosen the estate retirement option is no longer available in the future.

Early retirement of capital credits is not allowed when electric service is terminated.  When capital credits are retired (paid back), inactive accounts are included in the retirement calculation until their balances are fully retired.  Refunds will be issued subject to the $10 minimum check limitation.  Of course, capital credit refunds cannot be delivered correctly if the co-op is not kept abreast of address changes, so PLEASE keep us informed of your current address!

The heirs of an estate can choose to close out the capital credit account of a deceased member by opting for an estate retirement.  With this option, the capital credit balance is retired at a discount and a refund check is issued to the heirs.  If you are interested in finding out more about estate retirements, please contact the Capital Credit Department at 830-997-2126 or toll-free at 1-800-900-CTEC (2832).

The co-op keeps a record of all capital credit checks that are not cashed.  Claims on these accounts can be made indefinitely, but after three years, unclaimed amounts must be transferred to the Texas Unclaimed Property fund.  Some of these unclaimed funds are returned to the co-op to be used for scholarships and economic development.  Using these proceeds, the Central Texas Electric Scholarship Fund has been able to support higher education for co-op members and their families who live within the co-op’s service area.  These funds have also given rise to the co-op’s Economic Development Fund, which helps promote economic development within the co-op’s service area.

Yes, you can!  Both of these two programs are designed to “give back” to the communities we all live in.  Operation Round-Up is a program designed to provide grants to charitable causes and non-profit civic organizations within the co-op’s service territory.  It is administered by a voluntary Board of Directors, and all funds are kept separate from Co-op funds.  The CTEC scholarship program uses unclaimed capital credit funds to award student scholarships to co-op members or family members (whose primary residence is served by CTEC) for full-time study at an accredited secondary education school. Just call the nearest CTEC office to discuss your intentions of donating your capital credits to one of these CTEC programs.

Complete a Capital Credits Request Form

Keep Your Address Updated!

Please make sure you keep your mailing address up-to-date to receive future statements, correspondence and checks!


Still have questions?

If you have questions about the capital credits allocated to your account, you can email us at or call us at 1-800-900-2832 Monday through Friday, between 8 a.m. and 5 p.m.

Please remember to include your name, account number and the best phone number to reach you, and one of our member services representatives will contact you.

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