Anza 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 conflict of interest policy is reviewed on an annual basis, and officers are required to disclose any action or situation that might violate the policy to the full board of directors.”

“The board of directors use a compensation survey when determining the compensation of the general manager. The survey shows comparative salaries for general managers from cooperatives located in california 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 mails an annual report to each member of the cooperative. Included in the annual report is a summarized copy of the cooperative's financial statements. The cooperative will provide, by appointment, a complete copy of the audited financial statements, conflict of interest policy, or the cooperative's governing documents to any member who requests a copy.”

“In order to provide retirement benefits to 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 the plan are based on the full funding limitation of the plan. Employer contributions for both plans are available to participating employees, including officers, 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 officer 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 through an unfunded welfare benefit plan. Beginning in year of retirement the cooperative pays 100% of the premium. The cooperative then pays 50% in year 2, 25% in year 3 and in year 4 the cooperative's contribution decreases to 0%. The value of these benefits has not been estimated.”

“The board of directors 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 gain reported on page 1, part i, line 19 differs from the total net margins reported on the cooperative's december 31, 2024 financial statements due to a book to tax adjustment required to conform to the form 990 instructions. The form 990 instructions require patronage dividends allocated or to be allocated by the cooperative to members as an expense. Specifically as benefits paid to or for members (part i line 14), patronage dividends are an increase in equity, specifically patronage capital, on u.s. Gaap basis financial statements. As noted in the disclosure of program accomplishments, the cooperative provides its members with up to two different classes of services. Electricity is provided through the electric division and fiber optic broadband services are provided through the connectanza division. Margins from the electric division were allocated as patronage capital on the basis of electric sales. The connectanza division reported a net margin of $541,373. Due to the recovery of prior year losses from tcfe connectanza division pursuant to the operation at cost principle, part i, line 19 reports revenue in excess of expenses of $541,373, equal to the amount of the loss recovery.”

“The cooperative annually provides each director 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. W.a. Ainsworth, harold burdick, and stephen silkotch retired during 2024; therefore, their prior year questionnaires were relied upon while preparing the return. There were no known changes.”

“Although the cooperative is no longer an rus borrower, its accounting records 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 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 $ 2,938,540 less: director fees reported on forms 1099-nec (108,748) less: employee officer benefits included in line 5 (203,826) plus: salaries and wages capitalized directly to plant 516,855 plus: salaries and wages capitalized/expensed indirectly through clearing and other accounts 168,680 total wages accrued and/or paid $ 3,311,501”

“Administrative and general expense is comprised of the following: administrative & general salaries, benefits, & other $ 1,477,508 office supplies 88,182 outside services 254,568 duplicate charges (credit) (34,207) directors 405,498 annual meeting 82,016 dues & subscriptions 84,794 donations 24,000 miscellaneous general 190,377 maintenance of general plant 210,599 total admin & general exp per financial statements $ 2,783,335 less: reclass of donations to part ix, line 1 (24,000) less: reclass of director fees to part ix, line 5 (108,748) less: reclass of labor to part ix, lines 5 & 7 (1,082,339) less: reclass of benefits to part ix, lines 8-10 (738,262) total admin & general expense per form 990, part ix $ 829,986”

“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 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. The loss of the fiber optics broadband services division has remained unallocated. To the extent cumulative margins exceed cumulative losses, patronage dividends will be issued to such patrons in the future. When this occcurs, part ix, line 4 will reflect patronage dividends issued to patrons for each class of service.”

“The board approves all grants, sponsorships, and/or donations made to non-profit and civic organizations. The approval process places an emphasis on organizations that are located in the cooperative's service area, with the intent of improving the communities in which our members reside. Depending on need, donations to other organizations are on a case by case basis. Each grant, sponsorship, and/or donation made during the year was below the reporting threshold of schedule i, part ii.”

“Other expenses is comprised of the following: cost of broadband access $ 190,046 taxes 37,803 transmission 43,780 total other expenses per form 990, line 24e $ 271,629”

“Patronage capital allocated or to be allocated 695,159. Patronage capital retired - total -210,769. Patronage capital retired - discount -35,034. Patronage capital retired - unclaimed 12,811. Net change in memberships -50. Oci - pension & benefits -26,449.”

“Audited financial statements were prepared by an independent accountant for the cooperative's financial statement audit year end of march 31st. The tax return has been and continues to be prepared based on a calendar tax year end of december 31.”