WHAT ARE CAPITAL CREDITS?
A Valuable Benefit for Members of KanOkla Networks
What are Capital Credits?
Capital credits reflect each member’s ownership in the corporation. KanOkla Networks does not earn profits in the sense that investor-owned utilities earn profits for their investors. Instead, any margins or revenues related to the coop remaining after all expenses have been paid are returned to the cooperative’s members in proportion to their services they subscribe to.
How Are Capital Credits Returned to You, the member?
“Retiring” i.e., paying back or returning capital credits is a two-step process.
Step 1: Allocation
An allocation determines your share of the cooperative’s margin in a particular year. Margins are “allocated” or assigned to members who have service with KanOkla Networks during the year in which the margin is generated. The allocation is based on the member’s services they subscribe to for that year. Each member’s portion is referred to as a “capital credit allocation”
Step 2: Retirement
Once capital credits are allocated they are retained by KanOkla Networks until the Board reviews the cooperative’s financial health and can declare a retirement which is usually done once a year. Capital Credits are retained because they are the most significant source of equity for the cooperative. Equity is used to help meet the expense of the coop, such as paying for new equipment to serve our members and repaying debt. Capital credits help keep rates at an affordable level by reducing the amount of funds that must be borrowed to grow and maintain KanOkla Networks system.
What Happens to my Capital Credits when I pass?
Kanokla Network’s board of directors will allow the capital credit to be “retired early” or paid back to your legal representative in the case of a member’s death. In order for the claim to be paid, There is paperwork that needs to be filled out and notarized. Contact our office for the required paperwork. Capital credits that are claimed early due to the death are returned at the present day value as if the capital credits were paid back after their normal period.
Other Capital Credit Questions?
If you have other capital credit questions, please call 800-526-6552