Because it's a return of capital, it's not taxable.
This, from https://www.haywoodemc.com/content/frequently-asked-questions-about-capital-credits
Does the member have to report capital credits on tax returns?
Capital credits are a return of money paid for electricity in a previous year and are generally
not taxable income
for residential consumers. Commercial and industrial consumers should discuss any capital credits retirements with their tax advisers.
