top of page

Iowa Lakes is a not-for-profit 501c(12) Cooperative, and member-owners that have purchased electricity and services from Iowa Lakes Electric Cooperative share in the profits or margins that remain after year end.  Those margins remaining after operating expenses are reinvested for a short period of time to provide member-owners with competitive, reliable and safe electric service.


Frequently asked Questions about Patronage

What is patronage?

Patronage is unique to cooperative utilities like Iowa Lakes Electric Cooperative (ILEC). Investor-owned utilities make profits and pay dividends to their stockholders. Cooperatives, on the other hand, work on a non-profit basis and allocate their margins (revenues minus expenses) back to their member-owners.

Are there other names for patronage?

Yes, in the cooperative industry several other terms are used, such as: capital credits, patronage capital, deferred patronage capital, membership dividends and patronage dividends. They all refer to the same thing - the Cooperative's way of tracking and paying member-owners their share of margins.

How is patronage allocated to member-owners' accounts?

The amount earmarked in your name depends on your energy purchases. For the majority of our member-owners in order to calculate this, we divide your annual energy purchases by the Cooperative's electric revenue for the year to determine your share of the Cooperative's margins. The more electricity you buy, the more capital credits you earn.

Capital credits are not dollars in the bank. Capital credits represent funds that have been invested in the Cooperative's utility plant. The board of directors decides when the Cooperative is financially able to pay prior years' capital credit allocations.

Does my patronage earn interest?

No. The money retained by ILEC as capital credits is invested in the Cooperative so ILEC borrows less money and, therefore, is able to maintain lower rates for our member-owners. The lower rates are what a member-owner sees immediately as a benefit.

How and when do I receive my patronage?

The ILEC board of directors has the discretion to authorize the retirement of previously allocated capital credits. When considering a retirement, the board analyzes the financial health of the Cooperative. Currently, ILEC has been paying/retiring capital credits on a 15-year rotation cycle. For example, capital credits earned in 2002 were retired 15 years later in July of 2017. In the event the board authorizes the retirement of capital credits, current members who did business with the Cooperative during the year for which the board has authorized retirement of capital credits will receive a credit on their electric bill. Patronage retirement checks are issued to former member-owners.

On occasion, the Board may authorize the retirement of more current capital credits. These retirements are handled in a similar manner with former member-owners receiving a check and current member-owners receiving a bill credit.

What happens to my patronage if I move?

You will no longer receive additional credit allocations but the balance that you earned while an active member-owner will be maintained in your name until they are retired. Because capital credit retirements are made a number of years after the credits are earned and allocated to your account, you should always keep the Cooperative informed of your current mailing address.

Do I have to pay taxes on my capital credit refunds?

Please consult with your tax advisor for any potential tax implications.

What happens to the patronage of a member-owner who passes away?

When a current or former member passes away, there are two options available related to the member's capital credit account.

One option is for the member's beneficiaries to continue receiving a general retirement check each year until the capital credit account is paid out. In this case, Form B needs to be completed by the executor of the estate and returned to the Cooperative.

The second option is to close the capital credit account without waiting for a general retirement. The account is paid out on a discounted basis to reflect the early retirement. These estate payments are not automatic. A representative of the estate must request the payment by submitting Form A. The ILEC board of directors will then consider these. If the board approves the retirement, a check will be issued to the estate for the discounted amount and the account will be closed. These estate payments are processed on a quarterly basis.

If an account was a joint account and one member has passed away, the deceased member's name is removed. Settlement of the capital credit account can only be made when both members have passed away and all required documents have been received and approved.

Does Iowa Lakes owe you money? Review the unclaimed property list and if you are or know someone on this list, please call 800.225.4532.

bottom of page