As a non for profit Electric Cooperative, any money left over at the end of the year, after all of the bills have been paid, is considered a margin. Normally, margins will be and should be positive. Positive margins are allocated to the Members of the Cooperative each year. Each Members' share of the allocated margins is considered a capital credit. The amount assigned to a Member is based on how much electricity the Member used.
Cooperatives retain capital credits for a number of years and reinvest them back into the Cooperative. By holding onto capital credit allocations, the Cooperative can lessen or eliminate the need to raise rates or borrow money. Essentially, the money is used to assist in operating the Cooperative.
The decision to return capital credits is left up to the Board of Directors. Some of the deciding factors as to when to retire capital credits include the Cooperative's level of equity, the lender requirements and the length of the time that assets are depreciated. To date, MJM has refunded $3,255,283 back to it's Members.