Lower Valley Energy Inc

“The organization operates as a cooperative. All of its customers are members of the cooperative and receive patrongage capital allocations.”

“Every member of the board is elected by the membership of the cooperative, which as stated above, constitutes the cooperative's customer base.”

“The board cannot sell a major portion of the assets of the cooperative without approval of 2/3 of the membership.”

“The completed form 990 is delivered to the board members prior to filing, and is available for reviw at a meeting of the board. Any questions from board members are answered prior to filing.”

“The policy is reviewed annually with officers, directors and key employees. They are required to disclose potential conflicts of interest annually and excuse themselves from discussions and decisions where the potential for conflict arises. They are also required to disclose new conflicts that arise during the year.”

“The cooperative periodically seeks the input of an independent consultant in setting wages and salaries of all employees, but this is not done every year. An independent consultant was not hired in 2013 to review the president/ceo compensation. Each year the cooperative does rely on compensation data gathered by the nreca in setting wages and salary levels of all employees. The results are presented to the board for review and approval. The study and action of the board are documented.”

“Bylaws are available on the cooperative's website, as well as in a published member handbook that is provided to new members. They can also be requested by phone, email or in the office. Financial statements are mailed annually to all members. They can also be requested by phone, email or in the office. The conflict of interest policy(along with all policies) is available upon request as well.”

“Line 2c - patronage capital received from other organizations (primarily nrucfc) is recorded on this line in the current year. The cooperative found that it had incorrectly recorded patronage as revenue that is required to be paid to the bonneville power adminstration. Therefore, in the current year, the cooperative corrected this error causing the amount for the year to be a negative.”

“Part xi line 9 - members can choose to retire their patronage capital early at a discounted rate. Members retired a total of $2,905,456 of patronage capital during 2013. However, because discounts are recorded in a separate equity account, the difference in actual ending equity is $492,344.”

“Other expenses are made up of the following: customer accounts expense - $873,247; property tax - $580,407; transmission operation & maintenance - $693,692; customer service and information - $432,785; franchise tax - $145,577; power production expense - $121,063; other expense - $14,317.”

“Lines 9 and 23 - during the year, the cooperative borrowed $153,210,462 to prepay a portion of its power bill to the bonneville power adminstration. By prepaying, the cooperative will receive a discount on its future power bills. This transaction resulted in a significant increase in the balance of prepaid expenses and long-term debt. The overall transaction will benefit members with lower power cost.”

“The cooperative is a 50% owner of swift creek hydro electric company, llc (ein 61-1686955). Swift creek hydro provided the cooperative a k-1 for its share of operating losses. However, the cooperative included its share of swift creek's revenue and expenses in its operating numbers reported in this return, rather than reporting just a total net loss from the k-1.”