CTEC Allocates Over $5.89 Million in Patronage Capital to Members

Central Texas Electric Cooperative (CTEC) is pleased to announce the allocation of $5,894,387 in patronage capital to its members. This allocation, reflected in the June electric bills, underscores the cooperative's commitment to returning value to its members.

CTEC operates on a unique business model that differentiates it from most businesses. As a nonprofit organization, the cooperative reinvests any revenue exceeding operating costs back into the electric distribution system. These revenues, termed "margins," represent an interest-free loan from the membership to the co-op, facilitating operational and construction financing with the intent of future repayment to members.

Each member’s share of these margins is known as "patronage capital" or "capital credits." These credits signify each member’s equity in CTEC, with allocations made annually based on positive margins. For the year 2023, CTEC allocated $5,894,387 in capital credits.

Over time, these allocated capital credits are returned to members either through bill credits or capital credits checks. The return process can span up to 30 years due to the modest margins typically earned. CTEC prioritizes returning the oldest unretired capital credits, with last year’s retirements exceeding $2 million.

The retirement process is meticulously managed to ensure the cooperative’s financial stability. Each year, the CTEC Board of Directors determines the retirement amount, distributing half of it to the oldest unretired credits and the other half on a pro rata basis according to each member’s share of total outstanding credits. Active members can monitor their capital credits via their June electric bills, which detail the allocated amounts. Members with retired credits receive bill credits accordingly, while inactive members receive notifications and checks by mail.

CTEC encourages former members to update their contact information to prevent missing out on capital credit retirements. Unclaimed funds eventually transfer to the State of Texas, but this can be avoided by maintaining current address records with CTEC.

Additionally, in cases of deceased members, representatives should provide necessary documentation to manage the accounts appropriately.

For more information or assistance with capital credits, members can contact CTEC’s Capital Credit Department at the Fredericksburg office.