High West Energy Inc

“During the year, the members of the cooperative approved amendments to the bylaws at the annual meeting held june 2019. The following is a summary of changes made: article i - members section 7, removal of directors and officers, was amended in order to grant the board the right to remove a director for failure to comply with their requirements upon a two-thirds vote. Article iii - directors section 8, change in rates, was removed since the cooperative is no longer required to submit rate changes to its debt lender. Article xii - member this article of the bylaws was restructured to remove outdated language regarding membership in other organizations and add a new paragraph defining the word "member". A complete copy of the bylaws can be found under resources on the cooperative's website at: https://www.highwestenergy.coop”

“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 per district.”

“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. Amendment to the bylaws”

“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.”

“Directors and officers are required to review and be familiar with the policies outlined in the cooperative's conflict of interest policy, and are required to disclose any action or situation that might violate the policy to the full board of directors as soon as possible. The conflict of interest policy is generally reviewed on an annual basis.”

“The board of directors use comparative industry data from each state in the cooperative's nreca region and supplemental national data provided by nreca when determining the compensation of the ceo/general manager. This data shows comparative salaries for ceo/general managers from similarly situated cooperatives located in wyoming, nebraska, colorado, and the nation. The board and the ceo/general manager use comparative industry data from each state in the cooperative's nreca region and supplemental national data provided by nreca when determining the compensation of the cooperative's other employees meeting the definition of officer and key employees, if any. This data shows comparative salaries from similarly situated cooperatives located in wyoming, nebraska, colorado, and the nation.”

“The cooperative provides a summarized copy of the audited financial statements to the members of the cooperative at the annual meeting. The cooperative will provide a complete copy of the audited financial statements or governing documents to any member who requests a copy. Additionally, a copy of the cooperative bylaws can be found 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. Employer contributions for this plan are available to participating employees, including officers and higly compensated employees, meeting the eligibility requirements of such plans. The cooperative also provides health, dental, vision and life insurance to all eligible employees through a qualified plan. The amounts reported on part vii, column (f) for the officers and highly compensated employees is comprised of 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 retirement plan, the cooperative also provides post-retirement health insurance benefits through an unfunded welfare benefit plan. The value of these benefits has not been estimated.”

“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.”

“Revenue less expenses as reported on page 1, part i, line 19 differs from the total net margins reported on the cooperative's audited financial statements due to book to tax adjustments required to conform to the form 990 instructions. The equity method income is recorded on the cooperative's books and included in total net margins. U.s. Gaap requires the cooperative to record on its books the equity method income from its wholly owned subsidiary. Equity method income is not income for irs form 990 purposes and as such has been reported as an other change in net assets.”

“The accounting records of the cooperative 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 its 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 & geral $ 1,201,012 outside services 1,353,974 office supplies 459,907 insurances & damages 110,579 regulatory commission 65,600 dues 64,485 directors 187,346 maintenance of general plant 67,799 miscellaneous general 260,691 total admin & general exp per financial statements $ 3,771,393 less: reclass of donations to part ix, line 1 (7,087) less: reclass of director fees to part ix, line 5 (169,111) less: reclass of labor to part ix, lines 5 & 7 (929,511) less: reclass of benefits to part ix, lines 8-10 (376,110) total admin & general expense per form 990, part ix $ 2,289,574”

“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 $ 3,958,919 less: director fees reported on forms 1099-misc (169,111) less: employee officer benefits included in line 5 (89,905) plus: salaries and wages allocated to nonoperating margins 895,710 plus: salaries and wages capitalized directly to plant 1,626,982 plus: salaries and wages capitalized/expensed indirectly through clearing and other accounts 170,702 total wages accrued and/or paid $ 6,393,297”

“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 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 2019 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.”

“All grants, sponsorships, and/or donations are made to non-profit and civic organizations that are located in the cooperative's service area, and all are intended to improve the communities in which members reside. Each grant, sponsorship, and/or donation made during the year was below the reporting threshold of schedule i, part ii.”

“Equity method income(loss) of subsidiary 203,172. Patronage capital allocated or to be allocated 3,363,536. Patronage capital retired - total -1,756,487. Patronage capital retired - discount 257,221. Post-retirement benefit adjustment -82,471.”

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