Concho Valley Electric Cooperative Inc

“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. Disposal of a substantial portion of the cooperative's assets 2. Dissolution/liquidation of the cooperative 3. Merger or consolidation with another cooperative organization 4. Amendments 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 for discussion and review prior to filing. The discussion and review occurred at a board meeting before filing the return.”

“All directors and employees are required to disclose any conflict of interest to the executive vp/ceo as soon as possible.”

“The board of directors use a compensation survey, independent compensation consultant and compare compensation reported on other cooperatives irs forms 990 when determining the compensation of the executive vp/ceo. The survey shows comparative salaries for general managers & ceos from cooperatives located in texas and the nation. The board and the executive vp/ceo use the expertise of an independent compensation consultant, a compensation survey and compare compensation reported on other cooperatives irs forms 990 when determining the compensation of the cooperative's other employees meeting the definition of officer and key employees, if any. The survey includes salaries from similarly situated cooperatives throughout texas and the nation.”

“The cooperative provides a copy of its bylaws to all new members who sign up for service. The bylaws can also be found on the cooperative's website. 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. Additionally, a summarized copy of the cooperative's financial statements are provided to the members of the cooperative at the annual meeting.”

“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, dental, and life insurance to all eligible employees through a qualified plan. The amounts reported on part vii, column (f) for the officers, key employees, 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 executive vp/ceo to be both the top management official and the top financial official. Therefore, only the executive vp/ceo 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 accounting records of the cooperative are maintained in accordance with the uniform system of accounts (usoa) as prescribed by the federal energy regulatory commission for class a and b electric utilities. 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.”

“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 $ 4,458,240 less: director fees reported on forms 1099-nec (20,250) less: employee officer benefits reported on line 5 (181,833) plus: salaries and wages capitalized directly to plant 1,449,967 plus: salaries and wages capitalized/expensed indirectly through clearing & other accounts 534,718 total wages accrued and/or paid $ 6,240,842”

“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 calendar tax 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. 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 administrative & general and other expenses as follows: administrative & general salaries, benefits, & other $ 2,134,747 office supplies 234,096 outside services 284,668 regulatory commission 75,135 association dues 61,009 directors 43,965 annual meeting 114,607 capital credits 27,118 maintenance of general plant 50,738 miscellaneous general 1,839 total admin & general exp per financial statements $ 3,027,922 less: reclass of tower expense to part viii, line 6b (2,790) less: reclass of director fees to part ix, line 5 (20,250) less: reclass of labor to part ix, lines 5 & 7 (1,378,050) less: reclass of benefits to part ix, lines 8-10 (689,629) total admin & general expense per form 990, part ix $ 937,203 operating taxes 4,800 other deductions 10,619 total other expenses per form 990, part ix $ 952,622”

“The cooperative previously included interdivisonal accounts as components of accounts receivable and accounts payable on lines 4 and 17 of part x. However, for the 2024 calendar year, the cooperative is now reporting these interdivisional accounts on a consolidated single entity basis and no longer as separate components of accounts receivable and accounts payable; therefore, to increase consistency, the interdivisional accounts have also been consolidated and reported on a single entity basis for the 2023 calendar year.”

“Patronage capital allocated or to be allocated 5,627,098. Patronage capital retired - total -1,817,542. Patronage capital retired - discount 66,228. Net change in memberships 2,790. Other comprehensive income - provision for pensions and benefits 26,659. Special retirements -117,709.”

“Audited financial statements were prepared by an independent accountant for the cooperative's financial statement audit year-end of september 30th. The tax return has been and continues to be prepared based on a calendar tax year-end of december 31. The board as a whole is responsible for overseeing the financial statement audit and selecting the independent financial statement auditor.”