12/29/2023 0 Comments Lumbee river emc finance![]() Capital credits are calculated based upon a member’s electricity usage. Do I have to be a member for an entire year to earn capital credits? Since capital credits are a member’s share of the margins, no credits are allocated for a year when there are no margins. Capital credits are allocated only for a year in which your cooperative earns margins. The percentage of your total payment that is allocated as capital credits varies from year to year, depending upon the margins of the cooperative. What percent of my payment is returned as capital credits? The sum of your payments for a year is multiplied by a percentage to determine the allocation of your capital credits. The more electric service you buy, the greater your capital credits account - although the percentage will remain the same. How are capital credits calculated?Īll members who purchase electricity during a year in which the cooperative posts margins earn capital credits based on how much electricity they purchase in that year. Each cooperative maintains its own policy on when capital credits are retired. These payments generally are made to members after a specified time period. When capital credits are retired, a check or credit is issued to you. ![]() What’s the difference between allocated and retired capital credits?Īllocated capital credits appear as an entry on the permanent financial records of the cooperative and reflect your equity or ownership in the cooperative. This capital allows your cooperative to finance operations and construction, with the intent that this capital will be retired or returned to you in later years. Instead, any revenues over and above the cost of doing business are considered “margins.” These margins represent capital furnished by the members to the cooperative for use as operating capital. Source: National Rural Utilities Cooperative Finance Corporation What are capital credits?īecause a cooperative is incorporated as a not-for-profit business owned by its members, it does not technically earn profits. ![]()
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