Dixie Electric Membership Corporation

“During the year the cooperative's bylaws were amended. The following is a summary of the changes: article iv - directors section 4.04 qualifications, was amended to add "(i) is unwilling or physically or mentally incapable of carrying out the duties of a director." section 4.06 amended the section heading to "removal of directors". Section 4.11. Director emeritus, was amended to state "any person serving on the demco board of directors for three (3) or more consecutive three (3) year terms or nine (9) consecutive years shall, upon separation from the demco board of directors, be considered as a director emeritus. As a director emeritus, such person shall be entitled to benefits as may be established by demco board policy." article v - meetings of directors section 5.06. Remote participation at meetings, was amended to state "(d) out-of-town travel for corporate business; (e) family member illness or emergency; (f) weather conditions; (g) military service; or (h) employment obligations; (i) when a special board meeting is called, and a board member is unable to attend in person due to a schedule conflict; (j) when a regular monthly board or committee meeting is rescheduled and a board member is unable to attend in person due to a schedule conflict. Remote participation is not to be used solely for a board member's convenience or to avoid attending a particular meeting in person. Effective january 18, 2024, no board member may participate remotely more than four (4) meetings during a calendar year". A complete copy of the bylaws can be found on the cooperative's website: www.demco.org/bylaws.”

“The cooperative was formed by the members to provide electric service at cost on a cooperative basis.”

“The members of the cooperative vote on the board of directors. Elections are done on a one member one vote basis.”

“The following acts require approval of the members of the cooperative: 1. Dissolution/liquidation of the cooperative 2. Merger or consolidation of the cooperative with another organization 3. Disposal of a substantial portion of the cooperative's assets 4. Amendment to the articles of incorporation”

“The cooperative has no committees with authority to act on behalf of the governing body. Therefore, and pursuant to form 990 instructions, the question has been answered "no".”

“Management presented a copy of the form 990 to the board subsequent to filing.”

“The board of directors and officers are required to review and be familiar with the policies outlined in the cooperative's conflict of interest policy. The board of directors and officers are required to disclose any action or situation that might violate the policy to the full board of directors as soon as possible. The conflict of interest policy is reviewed on an annual basis.”

“The board of directors use a compensation survey when determining the compensation of the ceo. The survey shows comparative salaries for ceos from similarly situated cooperatives located in louisiana and the nation. The ceo utilizes a compensation survey when determining the compensation of the cooperative's other employees meeting the definition of officer and key employees, if any. The survey shows comparative salaries from similarly situated cooperatives located in louisiana and the nation.”

“The cooperative provides a summarized copy of the financial statements to the members of the cooperative at the annual meeting. The cooperative will provide a complete copy of the audited financial statements, conflict of interest policy, or governing documents to any member who requests a copy of any such document. The bylaws and the annual report are also posted on the cooperative's website.”

“In order to provide retirement benefits to its employees, the cooperative has established a defined contribution plan under section 401(k) of the internal revenue code. Employer contributions to the plan are made pursuant to the plan document. Additionally, the cooperative participates in a multi-employer defined benefit plan. Contributions to this plan are based on the full funding limitation of such plan. Employer contributions for both plans are available to participating employees, including officers, key employees and highly compensated employees, meeting the eligibility requirements of such plans. The cooperative also provides health and life insurance to all employees through a qualified plan. The amounts reported on part vii, column (f) for the employee officers and highly compensated employees are comprised of the total amount contributed to the 401(k) pension plan, the actuarial increase for future retiree benefits earned as a participant in the defined benefit plan, and the insurance premiums paid for their benefit. In addition to the above pension plans, the cooperative also provides post-retirement health insurance benefits through an unfunded welfare benefit plan. The value of these benefits has not been estimated.”

“Patronage dividends result from the payment of interest from cooperative banks and the purchase of supplies and services from other cooperative organizations. The expenses associated with purchases from and payments to such cooperative organizations are a direct component of cost of the electric service provided by the cooperative to members.”

“The cooperative maintains its records in accordance with the uniform system of accounts (usoa) prescribed for borrowers of the united states department of agriculture rural utilities service. The usoa does not record expenses in the general expense categories provided on part ix. The cooperative separately reports salaries and wages, employee benefits, and payroll taxes that are allocated in accordance with its accounting system, but other expenses that are described in lines 1-23 are reported on line 24 under the expense categories required by usoa.”

“Salaries and wages are allocated to asset, liability, and expense accounts based on the accounting system described above. The following schedule reconciles amounts reported on lines 5-7 to total wages accrued and/or paid: total per lines 5-7 $22,314,502 less: director fees reported on forms 1099-nec (339,749) less: employee officer benefits included in line 5 (626,420) plus: salaries & wages capitalized directly to plant 7,137,240 plus: salaries & wages capitalized/expensed indirectly through clearing & other accounts 2,280,656 total wages accrued and/or paid $30,766,229”

“Pursuant to the form 990 instructions, the amount of patronage dividends paid to the members (hereinafter referred to as "patrons") should be reported on part ix, line 4. The phrase "patronage dividends paid" refers to the process, subsequent to year-end, by which the cooperative allocates patronage capital to and, therefore, operates at cost with its patrons. The cooperative's tax exempt purpose is to provide electricity to its patrons and to do so on a cooperative basis. Tax law defines "operating on a cooperative basis" as subordination of capital, democratic control, and operation at cost. The cooperative operates at cost through the allocation of true patronage dividends (also referred to as allocations of patronage capital) to its patrons. Patronage dividends are considered paid if the allocation is made (1) pursuant to a pre-existing obligation, (2) from the margins produced from the transactions done with or for patrons, and (3) in a fair and equitable manner on the basis of patronage (i.e. Purchases). Additionally, the allocation of patronage dividends should be made within a reasonable time period after the close of the cooperative's year-end of december 31. Each one of these requirements for a true patronage dividend is provided for in the non-profit operation article of the cooperative's bylaws. In general, the amount reported on part ix, line 4 represents the amount of patronage capital that is either allocated or to be allocated to the patrons resulting from their purchase of electricity from the cooperative for the 2024 calendar year. Because patronage dividends are the process by which the cooperative operates at cost with its patrons and thereby a key component to accomplishing its exempt purpose, the cooperative has reported such amounts as an expense for form 990 reporting. Patronage dividends are not an expense for financial statements prepared in accordance with generally accepted accounting principles, however.”

“Other expenses is comprised of the following: customer accounts & service $ 4,948,943 sales 991,286 taxes 6,601,768 transmission 682,391 other deductions 197,494 total other expenses per from 990 line 24e $13,439,682”

“Administrative & general expense is comprised of the following: administrative & general salaries, benefits, & other $ 9,721,337 office supplies 1,298,381 outside services 2,114,785 injuries & damages 579,231 pension & benefits 1,123,249 regulatory commission 516,000 rent 254,965 miscellaneous general 254,897 district & annual meetings 196,516 directors 508,661 insurance 420,026 maintenance of general plant 2,087,283 total admin & general exp per financial statements $19,075,331 less: reclass of director fees to part ix, line 5 (339,749) less: reclass of labor to part ix, lines 5 & 7 (6,865,695) less: reclass of benefits to part ix, lines 8-10 (2,884,125) total admin & general expense per form 990, part ix $ 8,985,762”

“Equity method income from subsidiary 144,847. Net change in memberships -15,320. Patronage capital retired - discount 2,735,407. Special bad debt equity retirement -5,247,278.”

“The board of directors have assigned members to a finance committee to oversee the financial statement audit and select the independent financial statement auditor. Procedural changes did not occur during the year.”