You need to know 2 things about Capital Credits to better understand how they work:
Allocations:
- When the cooperative has more revenue than expenses in a given year (referred to as a margin), the margin is distributed proportionately (allocated) to all members in the form of capital credits
- A record of the yearly allocation is permanently maintained in the member’s name
- These allocations are considered each member’s equity in the cooperative
- The amount of capital credits a member earns is based on the amount of electricity purchased in a given year
Retirements:
This refers to capital credits that will be paid to you in the future.
- The Board of Directors will determine what yearly allocations will be retired (paid back) to the members
- This retirement cycle, from allocation to retirement, will typically be 25 years
- The 25 year cycle reflects the average service life of electrical distribution plant and also the repayment term on debt that is incurred by Clark County REMC