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Capital Credit Allocation
Capital Credit Allocation Overview
Capital Credits of Suwannee Valley Electric Cooperative (SVEC) represent a member’s ownership stake in the cooperative. The capital credits are not equivalent to cash or a liquid asset. The capital credits are representative of the amount invested by any particular member into the electrical system of the cooperative. This includes all equipment regularly observed by a member including poles, substations, lines, transformers and other various facilities.
All members’ capital credits together make up the cooperatives equity. The cooperative needs this equity to finance new facilities and improvements to the cooperatives facilities without relying entirely on costly loans. On average the cooperative finances 40% of its facilities through equity.
SVEC bases each member’s allocation of Capital Credits on their patronage for that year. The percentage of their patronage with the cooperative relative to all the cooperatives patronage by the membership is applied to the end of year net margins of the cooperative to determine that member’s capital credit allocation for the year.
Net margins are what remain after all expenses are deducted from all revenue for SVEC during the year. This number can fluctuate depending various things but is mainly driven by weather conditions. All members who participate in the cooperative during the year received a Capital Credit allocation if there were Net Margins at the end of the year.