Navasota Valley Electric Cooperative Inc

“During the year, the cooperative's bylaws were amended. A copy of the cooperative's bylaws can be found on the cooperative's website: https://www.navasotavalley.com/bylaws-0”

“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 provided a complete copy of the form 990 to the board for discussion and review prior to filing.”

“On an annual basis, the cooperative will require the board of directors and officers to complete and sign a conflict of interest certification and disclosure form. Legal counsel will review the policy with the directors before signing. 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 board of directors perform an annual review and utilize internal resources when determining the compensation of the general manager. Other than the general manager, the cooperative did not have any employees meeting the definition of officer or key employee. Therefore, and pursuant to form 990 instructions, line 15b has been answered "no".”

“The cooperative will provide a complete copy of its governing documents, conflict of interest policy, and audited financial statements to any member who requests a copy of any such document. Annually the cooperative provides a copy of the audited balance sheet and income statement to the members of the cooperative with the annual report.”

“In order to provide retirement benefits to 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 and highly compensated employees, meeting the eligibility requirements of such plans. The cooperative also provides health and life insurance to all eligible employees through a qualified plan. Amounts reported on part vii, column (f) for the officer and highly compensated employees is comprised of actuarial increase in the defined benefit plan, the total amount contributed by the cooperative to the defined contribution plan, and insurance paid on behalf of and 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.”

“The board of directors consider the general manager to be both the top management official and the top financial official. Therefore, only the general manager is listed as an employee officer.”

“Patronage dividends result from the purchase of wholesale power from a generation & transmission cooperative. Patronage dividends also 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 its members.”

“The cooperative annually provides each director who served on the board during the year a questionnaire and time log. The completed questionnaires and time logs are used to complete the applicable questions on the form 990 pertaining to business relationships among directors, officers, and key employees, as well as to determine if there are any transactions which must be reported in detail on schedule l - "transactions with interested persons". If the cooperative was unable to obtain a completed questionnaire and/or time log, the cooperative relied upon the completed information for the prior year. Ken elliott, jeff gonzales, and bennie kirven retired during 2024; therefore, their prior year questionnaires were relied upon while preparing the return. There were no known changes.”

“Although the cooperative is no longer a rural utility service (rus) borrower, its accounting records are maintained in accordance with the rus uniform system of accounts (usoa) prescribed for rus electric borrowers. The usoa does not record expenses in the general expense categories provided on part ix lines 1-23. The cooperative separately reports salaries and wages, employee benefits and payroll taxes that are allocated in accordance with their accounting system, but other expenses that are described in lines 1-23 are reported on line 24 under the expense categories required by the usoa.”

“Administrative & general expense is comprised of the following: administrative & general salaries, benefits, & other $ 769,946 office supplies 504,568 outside services 488,431 directors 33,267 associated dues 70,442 miscellaneous general 418,896 utility commission 101,981 injuries & damages insurance 201,713 employee medical, welfare & benefit 2,402,269 maintenance of general plant 119,960 total admin & general exp per financial statements $ 5,111,473 less: reclass of director fees to part ix, line 5 (115,631) less: reclass of labor to part ix, lines 5 & 7 (1,162,574) less: reclass of benefits to part ix, lines 8-10 (1,822,033) total admin & general expense per form 990, part ix $ 2,011,235”

“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 the total wages accrued and/or paid: total per lines 5-7 $ 4,298,756 less: director fees reported on forms 1099-nec (115,631) less: employee officer benefits included in line 5 (51,813) plus: salaries and wages capitalized directly to plant 1,040,294 plus: salaries and wages capitalized/expensed indirectly through clearing & other accounts 178,038 total wages accrued and/or paid $ 5,349,644”

“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 bylaws.”

“Other expenses is comprised of the following: customer accounts $ 352,307 customer service & information $ 2,290 total other expenses per form 990, part ix $ 354,597”

“Patronage capital retired -4,670. Net change in memberships 8,120. Other comprehensive income - provision for pensions and benefits -83,419.”

“The board as a whole is responsible for overseeing the financial statement audit and selecting the independent auditor. Procedural changes did not occur during the year.”