Estates Have Option for Discounted Early Capital Credit Distributions

As a member of Midwest Energy (a customer-owned cooperative), each year you earn capital credits which are margins paid by you to finance the plant (poles, wires, pipes, etc.) that provides electric and gas service to you.Our policy is to return these capital credits to you approximately 20 years after the year they are earned.

However, to assist heirs in settling the estates of deceased members, we offer an option where estates can apply to receive an early distribution of these margins. Since these payments are received “early” and are a benefit that is not available to other members, Midwest Energy will begin applying a discount rate effective Jan. 1, 2013 which covers the cost of returning the money early.That cost is determined by the interest we have to pay on borrowed money, currently 4%. Since this is an annual rate, it is compounded each year based on the number of years that payment is made early.

For example, a $20 capital credits earned by a member in 2010 would not be eligible for normal payment until after 2030 (in first part of 2031). If the 2010 amount was paid out to heirs in 2013, it would need to be discounted at 4% compounded annually for approximately 18 years (2013 – 2031). In this case, heirs receiving payment in 2013 would receive $9.87.Of course, heirs do not have to accept the discounted early payment option. They can continue to receive their payments annually.For more information on capital credits and early payment procedures for heirs, contact Midwest Energy at 800-222-3121.