Mt Wheeler Power Inc

“A business relationship exists between jerald anderson, board president, rick hendrix, board director, and randy ewell, general manager. All three individuals serve on the board of deseret generation & transmission at the request of and for the benefit of the cooperative.”

“The bylaws of the cooperative were amended as follows: section 5.07.1, secretary, was amended to include subsection (i), which states "in the absence of the secretary the board of directors shall appoint a director, with the consent of the director, to perform the duties of secretary, and, when so acting, such director shall have all the powers of and be subject to all the restrictions set forth in this section 5.07.1 for the secretary". Section 5.08.1, treasurer, was amended to include subsection (d), which states "in the absence of the treasurer the board of directors shall appoint a director, with the consent of the director, to perform the duties of treasurer, and, when so acting, such director shall have all the powers of and be subject to all the restrictions set forth in this section 5.08.1 for the treasurer". Article x, section 10.04, payment of capital credits and unclaimed cpaital credits, subsection 10.04.03 was amended to state "in the state of utah, the cooperative shall retain capital credits given to its members that remain unclaimed for a period of three years after the end of the year in which the credit is given. The cooperative shall use the retained capital credit to (a) pay all or a portion of a low-income individual's utility bills; (b) provide scholarships to graduating high school seniors in the area where the cooperative provides services in the state of utah; (c) provide financial assistance to, in the area where the cooperative provides services in the state of utah, to: (i) a school; (ii) a non-profit organization or (iii) a community organization. The cooperative shall establish criteria for recipients of the financial assistance described in this section that are based on: (a) a recipient's financial or other needs; and (b) the recipients community's interest".”

“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”

“From time to time the entire board will go into executive session for discussing items of a sensitive and confidential nature. Items discussed in executive session are not documented. However, actions taken by the board after executive sessions are adjourned are fully documented in the written minutes.”

“Management presented a copy of the form 990 to the board for discussion, review and approval prior to filing. The discussion and review was performed at the board meeting immediately before filing the form 990.”

“The board of directors and officers are required to review and be familiar with the policies outlined in the cooperative's conflict of interest policy. The board of directors and officers 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 reviewed on an annual basis. When a contract or business transaction is under consideration and a director or employee knows that he, she, or a close relative has a financial interest, this interest is required to be disclosed fully to the board of directors. The board of directors shall decide if such an interest should prevent the cooperative from entering into a particular transaction or contract.”

“The board of directors compare compensation from other cooperative's forms 990 and look at other external written contracts of similarly situated general managers and officers, when determining the compensation of the general manager. A compensation survey is also employed that shows comparative salaries for general managers from cooperatives located in nevada and the nation. The board and the general manager use a compensation survey when determining the compensation of the cooperative's other employees meeting the definition of officers and key employees, if any. The survey includes salaries from similar cooperatives throughout nevada and the nation.”

“The cooperative provides a summarized copy of the audited financial statement to the members of the cooperative at the annual meeting. The cooperative will provide a complete copy of the audited financial statements, conflict of interest policy, or governing documents to any member who submits a written request, subject to approval.”

“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 and highly compensated employees, meeting the eligibility requirements of such plans. The cooperative also provides health and life insurance to all employees through a qualified plan. The amounts reported on part vii, column (f) for the officers and highly compensated employees are comprised of the total amounts contributed to the 401(k) pension plan and the insurance premiums paid 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.”

“Although the cooperative is no longer a borrower of the rural utilities service (rus), the accounting records are maintained in accordance with the uniform system of accounts as prescribed for electric borrowers of the rus. The uniform system of accounting 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 uniform system of accounts.”

“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 $ 2,471,569 less directors fees reported on 1099-misc (92,300) less employee officer benefits included in line 5 (99,859) plus salaries and wages allocated to nonoperating margin 42,195 plus salaries and wages capitalized directly to plant 651,614 plus salaries and wages capitalized/expensed indirectly through clearing and other accounts 204,337 total wages accrued and/or paid $ 3,177,556”

“Administrative and general expense is comprised of the following: outside services employed $ 174,359 insurance 109,279 maintenance of general plant 307,775 regulatory commission expense 1,003 miscellaneous general expense 95,971 total administrative and general expense per 990 $ 688,390”

“Other expenses is comprised of the following: bbq expenses $ 452 internet expense 122,087 security system expense 1,768 sales expense 54,594 tax expense - other 559,230 transmission expense 80,600 total other expenses per form 990, line 24e $ 818,731”

“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 2016 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 donations are made to non-profit and civic organizations that are located in the cooperative's service area. All donations are intended to improve the communities in which our members reside. Each grant, scholarship and/or donation made during the year was below the reporting threshold of schedule i, part ii.”

“Patronage capital assignable 2,029,274. Patronage capital retired - total -907,374. Patronage capital retired - discount 34,896.”

“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.”