Patronage Cash Back

Customers of Midwest Electric are referred to as members, because you’re more than just a customer — you’re also a part-owner in the cooperative. And patronage cash back, or capital credits, represents your equity ownership in our community electric cooperative. As a not-for-profit, community-focused organization, Midwest Electric shares excess revenue back with the members we serve.

A part of your electric bill payment is retained by the cooperative as margins, or money left over after all bills have been paid. Midwest Electric uses the margins for capital improvements, such as building or replacing lines, new substations, and other electric infrastructure upgrades to meet members’ evolving needs and expectations. Each member’s share is allocated on paper to a patronage capital account. After being used by the cooperative as working capital, the money is returned to customers as patronage cash back.

Patronage cash back is like earning a dividend from a company in which you own stock. Midwest Electric has a strong record of annually returning excess revenue with our members. Since 1955, when the co-op started distributing patronage cash back to members, Midwest has returned more than $33 million. We typically return around $500,000 to $1 million per year or more, although it is possible that more or less — or even $0 — could be returned in a given year, depending on the cooperative’s financial situation.

Patronage cash back is allocated to members in proportion to the dollar amount of electricity each member uses. It is typically returned as a credit on members’ electric bills mailed around Nov. 21, or as a separate check mailed in December.

Member-owned, not-for-profit electric cooperatives like Midwest Electric set their electric rates to bring in enough money to pay operating costs, make payments on any loans, and provide an emergency reserve. At the end of each calendar year, we subtract operating expenses from the total amount of money collected during the year and this balance is our “margins.” Excess margins are shared back with our members because we belong to them.

Member Economic Participation is one of the Seven Cooperative Principles.

It’s important that you let us know your forwarding address, so we can send you your patronage cash back check.

The patronage cash back of a deceased member may be paid – on a time-discounted basis – without waiting for a general retirement. Or, you can have the patronage account transferred to another individual.

However, these estate payments or transfers are not automatic. A representative of the estate must request the patronage cash back by submitting an official death certificate and other documents.

In order to maintain financial stability and to be fair to all members, we discount the amount of estate cash back withdrawn early to reflect the time value of money. Or, you can choose to receive the cash back at the future scheduled retirement dates with no reduction.

Sometimes when a member moves, we’re not able to contact the member and give them their patronage payment. Midwest Electric tries to locate those customers who may be entitled to unclaimed patronage cash back. After attempts to locate the former member, any unclaimed funds will be reassigned to current members following the guidelines established in the cooperative’s code of regulations.

Here is our current listing of names of former customers who have unclaimed patronage cash back (updated Feb. 2021).

We encourage you to consider changing your account from an individual account to a joint account.  You are not required to make this change, but there are some advantages to consider.  At this time, a joint membership is only available to married couples.

The primary benefit of a Joint Membership involves how the account’s accumulated patronage capital shall be handled in the event of the death of one of the account holders.

Each member of Midwest Electric earns “patronage capital” based on the amount of electricity used and based upon Midwest’s profit in that year. That patronage is determined annually and accumulated in your patronage account.  Typically, each year a portion of that accumulated patronage capital is paid back to Members in the form of a bill credit or a refund check. 

However, when a member dies having an individual account, the balance in that accumulated patronage capital account belongs to the heirs of the deceased Member.  There are legal requirements to release the earned patronage, which can prolong that process.

If you switch to a Joint Membership while still married, then upon the death of the account holder we continue to hold that account in the name of the surviving Member and upon proof of death, we will simply remove the deceased member’s name. The surviving member will then continue to accumulate and receive the patronage capital.

Advantages of a Joint Membership:

• In the event of a death, a Joint Membership, and therefore the accrued patronage capital account, will remain in the name of the surviving member and upon presentation of the deceased member’s death certificate, no further paperwork is required. Many married couples hold their assets jointly and appreciate this “survivorship” feature.
• Either Member will be able to contact Midwest and inquire about billing issues, outages, or request information or services related to that account.
• Either one of the Members is entitled to vote on matters submitted to the Membership for consideration, such as the Board of Directors elections.
• If otherwise qualified, each of the Members (but not both at the same time) is entitled to run for election to the Board of Directors.

• A good payment history for the account may be beneficial to each of the members’ credit scores or reports.

• The accrued capital credits, an asset of the account owner, are owned by each of the two Members.  In the event of a divorce, each spouse would have a claim to it.

Disadvantages of a Joint Membership

• In the event of a death, the surviving member cannot elect to receive the accumulated patronage capital early in a discounted lump sum, but must continue to receive it over time. 
• Each of the Members of the joint account are liable for the unpaid balance due for electric services billed to that account.

Changing your electric account to a Joint Membership is easy and involves a brief, one-page form. This form must be notarized. Please contact our office (Monday – Friday, 7:30 a.m. to 4 p.m., at 1-800-962-3830) if you have any questions or would like a copy of that form.

You can also download the form by clicking here.