San Miguel Electric Cooperative Inc

“The decisions of the San Miguel Board of Directors are reported directly to the governing boards of the 10 member cooperatives. Certain contracts, i.e. wholesale power contracts are subject to the approval by the members of the 10 cooperatives.”

“San Miguel Electric Cooperative, Inc (San Miguel) is a not-for-profit cooperative corporation organized for the purpose of generating electric power. San Miguel sells power pursuant to a wholesale power contract with South Texas Electric Cooperative, Inc (South Texas), which is a generation and transmission cooperative. South Texas in turn, sells power at wholesale to their 10 member cooperatives, all of which are distribution cooperatives providing retail service to their member-customers.”

“San Miguel is governed by a board of 19 directors, each of whom is selected by and represents one of the 10 member cooperatives. The directors are elected annually at the San Miguel Annual Meeting.”

“The decisions of the San Miguel Board of directors are reported directly to the governing boards for the member cooperatives. Certain contracts, i.e., wholesale power contracts are subject to the approval by the members of the cooperatives.”

“A copy of the draft IRS Form 990 was provided to each of the current board members for the April 2025 meeting. Company personnel reviewed the form 990 at the Finance and Audit Commitee meeting on April 24, 2025, with the full board present. Board members were given an opportunity to ask any questions prior to the filing of the return.”

“The San Miguel Board of Directors approved a Conflict-of-Interest Policy on December 10,2008. Since then, the policy has been amended on 07/21/2017 and 08/19/2022. The policy requires each "member of the Board of Directors, the General Manager, General counsel and all Department Managers to file with the President of the Board of Directors, a Disclosure Report within (30) days after attaining such a position or status and then annually thereafter". The policy further specifies that "The President of the Board of Directors shall report no later than the regular March monthly Board meeting each year that he or she has received disclosure reports from all reporting persons signed and dated by February 15th of the current year". The disclosure report includes questions regarding each person's personal and business relationships and any potential claims against San Miguel. In accordance with the policy requirements, the above-mentioned parties are asked to complete and sign both the disclosure report and/or the conflict-of-interest report on an annual basis.”

“The Salaries of all officers are based on a national survey for similar positions in the utility industry and recommended by an independent management consulting agency.”

“As San Miguel has outstanding loan funds guaranteed by the Rural Utilities Service, the financial statements are a matter of public record and are provided to individuals upon request. We do not typically make San Miguel's governing documents or conflict of interest policy available to the public.”

“See general explanation on Schedule O for form 990, Part VI, Section B, Line 15.”

“For the 2011 tax reporting year, the IRS made a significant change to the 990 instructions, whereby entites exempt under 501 (c)12) of the Internal Revenue Code are to report patronage dividend paid to their members on Part IX, Line 4. San Miguel being duly organized in the State of Texas and exempt under 501 (c)(12) of the Internal Revenue code operates on a cooperative, non-profit basis for the mutual benefit of its patrons. As such, all revenues or margins received in excess of operating costs are retained as equity and allocated a credit to each patron's capital account. Should the Board of directors determine that the financial conditions of the cooperative will not be impaired, and there are not requirements which restrict such distribution, the Board of Directors may choose to retire credits reflected in member accounts in part or in full. Retirements of capital credits are restricted under San Miguel's current mortgage indenture until certain thresholds be met. San Miguel interprets the definition of "paid" to mean paid in money, property, or qualified written allocations: therefore, San Miguel is reporting as allocate, for the 2011 and all subsequent tax reporting years, all excess margins as paid to its patrons on an annual basis in accordance with the above referenced interpretations fo the IRS instructions.”

“See general explanation on Schedule O for core Form 990, Part I, Line 19.”

“See general explanations on schedule O for form 990.”

“As part of the Brazos Transaction, funds were received in advance for Brazos' portion or debt obligations. During 2024, $1,177,204 of original debt obligations was amortized. As referenced on Schedule O, Part 1, Line 19, San Miguel's margins received in excess of operating costs are retained as equity and allocated as a credit to each patron's capital account. The amount of margins retained in 2024 was $4,446,962. the net margins and repaid debt netted to $3,269,756.”

“Yes, the organization does have a committee that assumes responsibility for oversight of the audit, but no changes in its oversight process or selection has occurred during 2024.”