Capital Credits

As a member of our cooperative, you're also an owner. So rather than earning profits, Oregon Trail Electric Cooperative invests a portion of that money toward strengthening the operations that power your life and assigns the rest to you. These funds are called capital credits.

Each year, the OTEC Board of Directors determines what portion of capital credits can be returned to our membership. Capital credits, which are based on the dollar amount of electricity each member purchases, vary from member to member and year to year.

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2022 Capital Credits Information

The OTEC Board of Directors approved the retirement of $3 million in capital credits to current and former OTEC members based on the amount they were billed during previous years, dating back to 1996.

Checks were mailed to members beginning in December 2022. Returns were applied directly to the member's account if the amount was less than $15 or if the member had a past due balance. Members with returns greater than $15 and no past due accounts received a check in the mail.

Special or Early Retirement of Capital Credits

Capital credits are eligible for early or special retirement in accordance with OTEC's bylaws when a member passes away. Click here to read the bylaw at Section 8.

The heir(s) or representatives of the deceased member's estate can request a special/early retirement of a deceased member's capital credits by filling out the packet below:

Capital Credits Retirement Packet (1.17 MB)

*Please note that only individual member capital credit accounts are eligible for special/early retirement. Joint accounts may be retired upon death of both joint account members. Business accounts including corporations, LLC's, etc., are not eligible for special/early retirement.

Donation of Capital Credits

Decedent OTEC members:

Heir(s) or representatives of a deceased member's estate can fill out the packet above and note that they would like to have the capital credits donated to the OTEC Member Foundation upon special/early retirement.

Current or Past OTEC Members

Current or past OTEC members who would like to donate their current year's capital credits or full capital credit margins to the OTEC Member Foundation can do so by clicking here.

Capital Credits Frequently Asked Questions

The difference between a cooperative such as Oregon Trail Electric Cooperative (OTEC) and an investor-owned, for-profit, utility is that a cooperative is owned by the member-owners it serves. As a member-owner, you share in the margins 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 a credit, a “capital credit”. This allocation, in OTEC’s case, is based on the dollar amount of your purchases during the same year.

You need to know two things about capital credits in order to understand how they work for you:

Allocations: Each year, you are "allocated" your portion of the previous year's margins based on the amount of electric service and power delivery you purchased from OTEC in relation to the total amount purchased by all members during the year. This amount is used by OTEC to fund capital needs for items 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.
Rotation or “retirement”: This is what you will get in cash at a later date. OTEC uses the amount "allocated" to you for a time, but then returns this amount to members. When it is your turn in the retirement rotation, this is when you get actual “cash back” dollars.

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 their accumulated balance of all prior years’ service.

There is one special condition when a capital credit balance may be “cashed out” or refunded before the 30-year maturity date. When a member dies, OTEC’s Bylaws allow the surviving spouse or executor of the estate to apply for early retirement of all balances.[1] There are three options for the spouse, executor, or heirs to consider:

The first option is to continue and wait for the capital credit refund to be processed through the normal annual retirement schedule. (up to 30 years)
The second option is to apply for early retirement of the deceased member’s capital credit account. To ensure all members are treated fairly, particularly those who are not receiving full cash-outs before the rest of the membership, the capital credit balance is discounted or reduced to the present value.
The third option is to donate the entire capital credit balance to OTEC’s scholarship fund. In 2020, 32 deserving students received scholarships to continue their education beyond high school. For more information visit our Community page.

Net Present Value (NPV) formulas are used to determine today’s value of money that would otherwise have been paid in a series of payments through OTEC’s normal retirement process over 30 years. Capital credits earned one year ago have less value than those earned 20 years ago. The three key factors in NPV formulas are time, NPV rate, and balance. OTEC currently uses a 20-year maturity, and a 5.45% discount rate when calculating the current worth of the capital credit account balances.

Example:

Mary Jones’ daughter applied for early retirement of capital credits after her mother’s death. Mary Jones’ capital credit account shows a balance of $1,400 which is an accumulation of a series of margins allocated from 1999 to 2016.

Net Present Value Explained

Retirement of Capital Credits Scenario	Total Paid from Capital Credit Account
Mrs. Jones' daughter receives annual capital credit payments for up to 30 years until account is zero.	$1,901.12
Mrs. Jones' daughter receives a one-time lump sum payment payment for early payout at the NPV. OTEC does not discount the first $100 of the balance.	$933.88

Click here to see the calculation table

Footnote

Joint memberships are not eligible for early retirement unless both members are deceased.

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Capital Credits

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Capital Credits Frequently Asked Questions

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Unclaimed Capital Credits Search

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Capital Credits Frequently Asked Questions

What are capital credits?

How do capital credits work?

When are capital credits returned to members?

What should a member do if she or he moves from our service area?

How does a member know the amount of her or his capital credits?

Is my capital credit allocation taxable?

What happens to the capital credits of a deceased member?

Can you explain what discounting to the Net Present Value means?

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Office Hours

Baker Office

Burns Office

John Day Office

La Grande Office

Offices Closed Holidays for 2025