Golden Spread Electric Cooperative Inc

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

“The organization was formed by its members to provide wholesale power and transmission services at cost on a cooperatives basis. Each member is entitled to appoint two individuals to serve as its voting representative on the board of directors.”

“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 5. Expulsion of another member for conduct detrimental to the cooperative.”

“The form 990 is prepared by an external accounting firm. Prior to filing, management provides a draft of the form 990 to the audit committe of the board for discussion and review. Any comments received from the board are addressed prior to filing.”

“On an annual basis, officers and employees are required to complete and sign a conflict of interest certification and disclosure form. If policies need to be updated, they are drafted and then reviewed with legal counsel before presentation to the board of directors for their review and approval. Officers and directors submit federal energy regulatory commission form 561 "annual report of interlocking positions".”

“The board of directors use a compensation survey when determining the compensation of the cooperative's president/ceo. The survey includes salaries from similarly situated cooperatives throughout texas and the nation. The form 990 of similarly situated wholesale power supply cooperatives is also used by the board of directors to assist in establishing compensation for the president & ceo. The board and the president/ceo use 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 includes salaries from similarly situated cooperatives throughout texas and the nation.”

“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 financial statements and accompanying footnotes to the members of the cooperative with the annual report. The annual report are also located 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, dental, vision, longterm disability, and accidental death & dismemberment insurance to all employees, including officers, key employees and highly compensated employees, through a qualified plan. The amounts reported in part vii, column (f) for the officers and highly compensated employees is comprised of the actuarial increase in the defined benefit plan, the total amount contributed to the 401(k) pension plan and employer paid insurance premiums.”

“Patronage dividends result from the payment of interest to 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 net income of $11,834,702 is primarily the result of recovering prior year patronages losses from current year patronage sourced net margins, which would otherwise be allocable to the members as patronage capital. This recovery is consistent with tax accounting, bylaws of the cooperative and resolutions adopted by the board of directors.”

“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 wholesale power 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. The amount reported on part ix, line 4 represents the amount of patronage capital that is allocated to the patrons resulting from their purchase of wholesale power from the cooperative for the 2022 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: certain civic, political & related activities $ 134,124 operating taxes 5,833,878 other operating expenses & regulatory assessments 15,438,282 general & administrative expenses 22,622,362 total other expenses per form 990, part ix $44,028,646”

“The accounting records of the cooperative are maintained in accordance with u.s. Generally accepted accounting principles and the accounting system prescribed by the federal energy regulatory commision (ferc) for electric utilities. Under the ferc approved accounting system,the accounting records of the cooperative are maintained in accordance with a uniform system of accounts (usoa) that is designed for electric utilities and regulatory reporting. The usoa does not record expenses in the functional 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 its accounting system. All other expenses of the cooperative are on the applicable line based on the functional expense categories required by the usoa.”

“Equity method income(loss) of wholly-owned subsidiary 1,116,778. Book-tax adjustment: deferred revenue per ferc approved plan -16,882,597. Patronage capital allocated 21,411,539. Patronage capital retired -13,700,000.”

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