Trico 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 directors. 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 prior to filing. The discussion and review was performed at the board meeting immediately before filing the form 990.”

“The conflict of interest policy is reviewed and updated, as needed, based on a schedule of policy review of up to 3 per month at the monthly regular board meeting, and any time that a potential or actual conflict of interest comes to the attention of any board member or the ceo/general manager.”

“The board of directors use the form 990 from other cooperatives within the state when determining the compensation of the ceo/general manager. The ceo/general manager utilizes internal resources when determining the compensation of the cooperative's other employees meeting the definition of officer and key employees, if any.”

“The cooperative will provide a complete copy of its governing documents, conflict of interest policy and audited financial statements to any member by appointment at the cooperative's office. Annually the cooperative provides a condensed summary of the balance sheet and income statement to the members of the cooperative with the annual report. Additionally the bylaws of the cooperative are made available via its website.”

“In order to provide retirement benefits to its key 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 all participating employees, including officers, key employees, and highly compensated employees, meeting the eligibility requirements of such plans. The cooperative also provides health insurance to eligible key employees through a qualified plan. The amounts reported on part vii, column (f) for employee officers, key employees, and highly compensated employees is comprised of actuarial increase in the defined benefit plan, the total amount contributed by the cooperative to the defined contribution plan and insurance paid on behalf of and for their benefit.”

“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.”

“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 $1,312,901, which is the income statement effect of accrued unbilled revenue, equity method income, and the retention of non-operating 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 accrued. This timing difference is fair and equitable because it matches the patronage dividend allocated with the billing records used to allocate the margins. Equity method income is recorded on the cooperative's books and included in net margins. U.s. Gaap requires the cooperative to record on its books 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 following schedule is provided to further explain the impact of this transaction: add: unbilled revenue 12/31/24 $ 1,614,000 less: unbilled revenue 12/31/23 (1,639,000) (a) - net decrease in unbilled revenue $ (25,000) (b) - add: equity method loss from subsidiary $ 1,005,841 (c) - add: retention of non-operating income $ 332,060 net income on page 1, part i, line 19 (a + b + c) $ 1,312,901”

“The accounting records of the cooperative are maintained in accordance with the uniform system of accounts (usoa) as prescribed by the federal energy regulatory commission for class a and b electric utilities modified for electric borrowers of the rural utilities service. 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 $ 11,289,376 less: director fees reported on forms 1099-nec (153,449) less: employee officer and key employee benefits included in line 5 (650,705) plus: salaries and wages allocated to nonoperating margins 4,841 plus: salaries and wages capitalized directly to plant 3,043,202 plus: salaries and wages capitalized/expensed indirectly through clearing & other accounts 1,588,584 total wages accrued and or paid $15,121,849”

“Administrative and general expense is comprised of the following: administrative & general salaries, benefits, & other $ 3,579,511 office supplies 1,349,026 outside services 552,378 injuries & damages 471,750 employee pensions & benefits 54,389 annual meeting 74,823 miscellaneous general 1,445,633 regulatory commission 267,141 maintenance of general plant 1,964,045 total admin & general exp per financial statements $ 9,758,696 less: reclass of director fees to part ix, line 5 (153,449) less: reclass of labor to part ix, lines 5 & 7 (3,455,276) less: reclass of benefits to part ix, lines 8-10 (1,652,254) total admin & general expense per form 990, part ix $ 4,497,717”

“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 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 other expenses are comprised of the following: other deductions $ 400,501 transmission 195,893 taxes 1,514 total all other expenses per form 990, line 24e $ 597,908”

“Patronage capital allocated or to be allocated 6,274,700. Patronage capital retired - total -4,598,664. Patronage capital retired - discount 56,827. Equity method income(loss) from subsidiary -1,005,841.”

“The board as a whole is responsible for reviewing, overseeing the financial statement audit and selecting the independent financial statement auditor.”