When and how are capital credits returned?

Step 1: Allocation

• First, an allocation determines each member’s share of the cooperative’s margin for a given year.
• Margins are allocated—or assigned—to members who purchased electricity from the cooperative during the year in which the margin was generated in proportion to the electrical sales for that year.
• Each member’s allocation is determined by his/her kilowatt-hour consumption for that year.
• The co-op keeps a permanent record of each member’s capital credit account, which is where the allocated amount remains until it is paid—or “retired.”

Step 2: Retirement

• After reviewing the financial health of the cooperative, the Board of Directors may declare a retirement, at which time all or part of each member’s allocated amount is paid.
• SEMO Electric uses a first-in, first-out method (FIFO), meaning earlier years are paid before later years.