Central 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 trustees. Elections are done on a one member one vote basis.”

“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, the question has been answered "no".”

“Management presented a copy of the form 990 to the board for discussion and review prior to filing.”

“Trustees must disclose to the board president and employees must disclose to the general manager any situation, which, in his or her opinion, violates, may violate, or could appear to violate the intent of this policy.”

“The board of trustees use a compensation survey when determining the compensation of the cooperative's general manager. The survey includes salaries from similar cooperatives throughout new mexico and the nation. The general manager uses a compensation survey when determining the compensation of the organization's other employees meeting the definition of officer and key employees, if any. The survey includes salaries from similar cooperatives throughout new mexico and the nation.”

“The cooperative will provide a complete copy of its governing documents and audited financial statements to any member who requests a copy of any such document. Annually, the cooperative mails a copy of the audited balance sheet and income statement to the members of the cooperative with the annual report.”

“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 and highly 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 actuarial increase in the defined benefit plan, the total amount contributed by the cooperative to the defined contribution plan and the 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 to retirees prior to january 1, 1995 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.”

“The cooperative and western farmers electric cooperative (wfec), a rural electric generation and transmission cooperative, have entered into a wholesale power contract where wfec will provide the cooperative with electric power. As part of the agreement the cooperative must contribute equity to wfec in a manner and amount such that, as of june 1, 2026, the cooperative has contributed equity to wfec comparable to the amount of equity contributed to wfec by prior existing members. The purpose of the contribution is to obtain a power supply in order to meet the terms of the wholesale purchase contract. Pursuant to approval by the new mexico public regulation commission, the equity contribution is recovered monthly from the members through the sale of electricity.”

“In general, when an electric cooperative bases the patronage dividend calculation on its net book income/(loss), page 1, part i, line 19 - revenue less expenses - will be $0. For the current year, page 1 , part i, line 19 reports net income of $136,730, which is the income statement effect of accrued unbilled revenue and form 990 reporting of unrealized gains and losses as a component of other changes in net assets in lieu of reporting as an item of revenue or income. The gaap basis financial statements include an accrual for unbilled revenue because the cooperative's billing cycle does not end on the last day of the month. Therefore, it has revenue in december of each year that it has earned but will not bill until the first billing cycle of the following year. The cooperative estimates this revenue and records it as accrued unbilled revenue in order to match the revenue with the year earned. However, the cooperative allocates the revenue to members in the year it is billed rather than when it is accrued. This timing difference is fair and equitable because it matches the patronage dividend allocated with the billing records used to allocate the margins. Due to the timing of when the cooperative allocates accrued unbilled revenue, page 1, part i, line 19 annually reports net income equal to the net increase in accrued unbilled revenue or a net loss equal to the net decrease in unbilled revenue. The following schedule is provided to further explain the impact of this transaction: add: unbilled revenue 12/31/24 $ 754,000 less: unbilled revenue 12/31/23 (735,000) add: other changes 124,071 (a) - net income on page 1, part i, line 19 $ 136,730 (b) - benefits paid to members (i.e. Patronage dividends), part i, line 14 $ 4,166,770 (c) - unrealized gain - part xi, line 5 $ 6,341 total 2024 net margins (a + b + c) $ 4,309,841”

“The accounting records of the cooperative are maintained in accordance with the uniform system of accounts (usoa) as prescribed for electric borrowers of the rural utilities services (rus). 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 $ 6,194,154 less: trustee fees reported on forms 1099-nec (226,982) less: employee officer benefits included in line 5 (388,915) plus: salaries and wages capitalized directly to plant 2,847,116 plus: salaries and wages capitalized/expensed indirectly through clearing and other accounts 502,966 total wages accrued and/or paid $ 8,928,339”

“Administrative & general expense is comprised of the following: administrative & general salaries, benefits, & other $ 1,922,643 office supplies 184,402 outside services 110,849 injuries and damages 132,421 regulatory commission 345,578 miscellaneous general 321,442 trustees 297,563 dues and subscriptions 187,433 maintenance of general plant 91,215 maintenance of scada 76,912 duplicate charges (30,239) advertising 52,112 annual meeting 33,183 capital credits 11,948 rents 39,128 total admin & general exp per financial statements $ 3,776,590 less: reclass of trustees fees to part ix, line 5 (226,982) less: reclass of labor to part ix, lines 5 & 7 (1,296,981) less: reclass of benefits to part ix, lines 8-10 (621,006) total admin & general expense per form 990, part ix $ 1,631,621”

“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.”

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

“Patronage capital allocated or to be allocated 4,166,770. Patronage capital retired - total -2,890,090. Unrecognized post retirement benefit costs 23,317.”

“Audited financial statements were prepared by an independent accountant for the cooperative's financial statement audit year-end of june 30. The tax return has been and continues to be prepared based on a calendar tax year-end of december 31. The board has an appointed audit committee which is responsible for overseeing the financial statement audit and selecting the independent financial statement auditor. Procedural changes did not occur during the year.”