An election to participate or not participate in the Kootenai Electric Cooperative (KEC) Early Discounted Capital Credit program is made by the KEC member account holder on a voluntary basis. Once a credit has been issued to you it cannot be reversed, unless it was produced by KEC in error. Members may change their selection at any time by contacting KEC at Capital Credits Email or (208) 765-1200. The option selected by a member will remain their choice for future years, or until KEC receives instructions from the member to change their option.
In order to calculate the cash value of your 2023 capital credits today (as opposed to waiting 28 years or more until they might be paid at their full value) we must make some financial assumptions. First, we need a discount rate. The discount rate we rely on equals our estimated cost of capital. The rate is currently 5.25% per year. This rate is established annually and may change in future years.
The second assumption we require is the number of years until the capital credits would otherwise be retired as a part of a traditional first-in-first-out capital credit retirement program. Our current retirement cycle is 28 years, but that can increase or decrease over time based on the financial needs of the cooperative and the related actions of KEC’s Board of Directors. Our current capital credit cycle is 28 years, which is used to determine the timeframe for the amount available under the Early Discounted Capital Credit program.
It is important to recognize that the difference between the capital you contributed during the year and the discounted amount you could receive early is not forfeited by you. The amount of the difference, also known as the discount, will be maintained in an equity account in your name. It is non-redeemable. However, in the unlikely event the Cooperative was dissolved as a corporate entity, the amount of your permanent investment would be the basis by which your portion of any net proceeds available following dissolution would be determined. This is unlikely to occur, and such an investment in KEC should be viewed as both illiquid and permanent in nature.