Sierra 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, 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. The discussion and review was performed at the board meeting before filing the form 990.”

“The board of trustees perform an annual review and utilize internal resources and a compensation survey when determening the compensation of the general manager. The survey includes salaries from similar cooperatives throughout new mexico and the nation. Other than the general manager, the cooperative did not have any employees meeting the definition of officer or key employee. Therefore, and pursuant to form 990 instructions, line 15b has been answered "no".”

“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 provides a copy of the balance sheet and statement of operations 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. Employer contributions are available to participating employees, including officers, meeting the eligibility requirements of such plans. The cooperative also provides health and life insurance to all eligible employees through a qualified plan. The amounts reported on part vii, column (f) for the officer is 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 to qualifying individuals. The value of these benefits has not been estimated.”

“The board of trustees consider the general manager to be both the top management official and the top financial official. Therefore, only the general manager 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 cooperative annually provides each trustee who served on the board during the year a questionnaire and time log. The completed questionnaires and time logs are used to complete the applicable questions on the form 990 pertaining to business relationships among directors, officers, and key employees, as well as to determine if there are any transactions which must be reported in detail on schedule l - "transactions with interested persons". If the cooperative was unable to obtain a completed questionnaire and/or time log, the cooperative relied upon the completed information for the prior year. George biel retired during 2024; therefore, his prior year questionnaire was relied upon while preparing the return. There were no known changes.”

“The accounting records of the cooperative are maintained in accordance with the rural utilities service (rus) uniform system of accounts (usoa) prescribed for rus electric borrowers. The usoa does not record expenses in the general expense categories on part ix lines 1-23. The cooperative separately reports salaries and wages, employee benefits and payroll taxes that is allocated in accordance with its accounting system, but other expenses that are described in lines 1-23 will be 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 $ 1,113,025 less: trustee fees reported on forms 1099-nec (88,145) less: employee officer benefits reported on line 5 (24,026) plus: salaries and wages capitalized directly to plant 182,225 plus: salaries and wages capitalized/expensed indirectly through clearing and other accounts 105,779 total wages accrued and/or paid $ 1,288,858”

“Administrative and general expense is comprised of the following: administrative & general salaries, benefits, & other $ 644,832 office supplies 31,760 outside services 75,908 regulatory commission 40,323 dues and memberships 83,366 safety coordinator 4,225 employee training 69,121 directors 137,796 rural development 19,499 capital credit 4,189 annual meeting 44,509 maintenance of general plant 73,609 total admin & general exp per financial statements $ 1,229,137 less: reclass of donations to part ix, line 1 (8,044) less: reclass of trustee fees to part ix, line 5 (88,145) less: reclass of labor to part ix, lines 5 & 7 (429,307) less: reclass of benefits to part ix, lines 8-10 (156,552) total admin & general expense per form 990, part ix $ 547,089”

“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 by allocating 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 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 1,308,455. Patronage capital retired -366,153. Donated capital -49,356. Other comprehensive income - adjustment for post-retirement benefits -29,206. Discounted estate retirements 7,524.”

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