Capital Credits FAQS

A cooperative, such as SEMO Electric, is owned by the member-customers it serves.
As a member-owner, you share in the profits of the co-op.
At the close of each fiscal year, all revenue received in excess of expenses (i.e. profits) is allocated back to the membership in the form of capital credits.
This allocation is based on the dollar amount of electricity purchased during the same year.

You need to know 2 things about capital credits in order to understand how they work for you:

Allocations

Each year, you are "allocated" your portion of the previous year's profit based on the amount of electricity you purchased from SEMO Electric in relation to the total amount of electricity purchased by all members during the year.
This amount is put into a "holding account" for a number of years and used by SEMO Electric to fund capital needs for items such as power line construction, transformers, trucks, inventory, and other equipment.
This is an underlying principle of the cooperative business model and is one more way we keep your electric rates as low as possible.

SEMO Electric uses the amount "allocated" to you for a time but then returns this amount to members in the form of retirements.

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.”

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.