Margins are “allocated” or assigned to members who belong to the cooperative during the year in which a margin is generated. The allocation is based on the member’s proportion of service usage for that year. Each member’s portion is referred to as a “capital credit allocation.”
The amount of capital credits you earn in a given year is based on the amount of capital contributed to the cooperative through payment of your monthly bill for services and the amount of operating margins realized by the cooperative. Capital Credits are usually retired, which means paid to the member, as a percentage of certain prior year’s allocations.