2022-11-14T15:27:32-06:00 2021-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2021-01-01 740783753 MID-SOUTH ELECTRIC COOPERATIVE ASSOCIATION MID- 9368255100 PO BOX 970 NAVASOTA TX 778680970 ANDREW DALLMEYER SR. VICE PRESIDENT 9368255100 2022-11-14 1 ANDREW DALLMEYER 999009999 WILLIAM M MILLER P00439459 8067473806 2022-11-14 X 3 AAL1 IAL1 2021 2022-09-23 18:48:47Z MID-SOUTH SYNERGY KERRY KELTON PO BOX 970 NAVASOTA TX 778680970 112417582 0 X WWW.MIDSOUTHSYNERGY.COM X 1940 TX TO PROVIDE QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS OF THE COOPERATIVE. 8 7 173 0 -685 0 0 0 91366715 111904017 140122 99149 22836 301070 91529673 112304236 195 37 3479555 8620959 8535006 9626777 0 0 0 78469454 94937136 90484210 113184909 1045463 -880673 371819528 452923341 247541477 320393784 124278051 132529557 THE COOPERATIVE'S AND ITS SUBSIDIARIES' MISSION IS TO PROVIDE QUALITY SERVICE (ELECTRICITY, WATER, WASTEWATER, INTERNET, & SOLAR) AT A REASONABLE PRICE, BRINGING VITAL SERVICES TO INCREASE BOTH THE QUALITY OF LIFE AND ECONOMIC HEALTH IN THE MID-SOUTH SYNERGY SERVICE AREA. 0 0 PROVIDING ELECTRIC ENERGY TO OUR MEMBERS ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. THERE WERE 36,557 ACTIVE SERVICES AT YEAR END. COMMUNICATIONS DIVISION:PROVIDING BROADBAND INTERNET SERVICES THROUGH THE CONSTRUCTION OF A FIBER OPTIC NETWORK. WHEN CUMULATIVE NET MARGINS DERIVED FROM MEMBER SALES OF BROADBAND INTERNET SERVICES EXCEED CUMULATIVE NET LOSSES FROM SUCH SALES, THE COOPERATIVE WILL ALLOCATE PATRONAGE CAPITAL TO THE MEMBERS. THERE WERE 7,100 SUBSCRIBERS AT YEAR END. 0 0 0 0 0 0 0 1 0 1 0 1 0 1 1 0 1 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 1 0 0 0 0 0 1 1 1 1 0 1 74 0 173 1 1 1 0 0 0 0 108349670 4252903 0 0 0 X 8 7 1 0 0 0 1 1 1 1 0 0 0 1 1 1 1 1 1 1 1 0 X ANDREW DALLMEYER SR VICE PRESIDENT 9368255175 7625 HIGHWAY 6 NAVASOTA TX 77868 X PAUL MALEK DIRECTOR 2.80 1.50 X 12675 0 0 KENNETH MCDOUGALD DIRECTOR 1.80 1.00 X 11750 0 0 DENNIS MCWHORTER DIRECTOR 4.50 1.50 X 17663 0 0 JAMES MORRISON VICE PRESIDENT 2.40 1.00 X X 14513 0 0 DANNY PIERCE DIRECTOR 3.10 1.20 X 10825 0 0 JACK SHEPHERD SECRETARY/TREASURER 2.70 1.50 X X 12675 0 0 MARSHALL SHIRLEY PRESIDENT 4.00 1.00 X X 18713 0 0 RUSSELL WATSON DIRECTOR 4.20 1.50 X 19500 0 0 KERRY KELTON GENERAL MANAGER/CEO 75.00 1.00 X 459835 0 132333 TROY MORRIS SR. VICE PRESIDENT 55.00 1.00 X 285100 0 133323 MIKE MCDOUGALD SR. VICE PRESIDENT 50.00 1.00 X 282437 0 110080 ANDREW DALLMEYER SR. VICE PRESIDENT 55.00 1.00 X 233859 0 83336 DIANNE SECHELSKI VP BILLING 45.00 X 140464 0 64328 DAVID WILLIAMS VP OPERATIONS 42.00 X 209873 0 80249 MELANIE CABALLERO VP COMPLIANCE, REGULATORY & SUPPORT 54.00 X 163721 0 79281 BRANDON NORTHCUT VP TECHNOLOGY 55.00 X 152496 0 50161 DENNIS GILMORE SR. VICE PRESIDENT 50.00 X 220794 0 82102 RUSSELL SMITH CORPORATE COUNSEL 40.00 X 178270 0 26474 CATHY BARKER SR. HUMAN RESOURCES MANAGER 40.00 X 132942 0 51852 JOSH TURKNETT WATER CREW LEADER 40.00 X 134348 0 39757 JARED ANDERSON LINE FOREMAN 47.60 X 126545 0 50074 MICHAEL LONG SR. MANAGER PROJECTS & DEVELOPMENT 40.00 X 131314 0 56196 JAMES IDOM SYSTEM OPERATIONS SUPERVISOR 40.00 X 128211 0 35050 3098523 0 1074596 53 0 1 0 NATIONAL ON DEMAND INC PO BOX 2407 BURLINGTON NC 27216 SMART GRID CONSTRUCTION 15856898 MDR CONSTRUCTION INC 621 E BAYLIS CHAPEL RD COLUMBIA MS 39429 FIBER MAKE READY 8339449 LINETEC SERVICES INC 19820 N 7TH AVE SUITE 120 PHOENIX AZ 85027 LINE CONSTRUCTION 4943370 AMP UTILITY COMPANY LLC 518 S ENTERPRISE PKWY SUITE B CORPUS CHRISTI TX 78405 FIBER MAKE READY 2310522 MCCORD ENGINEERING INC 916 SOUTHWEST PARKWAY EAST COLLEGE STATION TX 77840 ENGINEERING 2308641 23 SALES OF ELECTRICITY 221000 100909491 100909491 PATRONAGE DIVIDENDS 221000 6507340 6507340 BROADBAND REVENUE 517000 3907728 3907728 SERVICE FEES 221000 573830 573830 OTHER PROGRAM REVENUE 221000 5628 5628 111904017 90286 90286 198000 10535 187465 187465 188150 -685 104873 96010 8863 8863 8863 7464 6801 663 663 POLE ATTACHMENT INCOME 221000 112942 112942 112942 112304236 112101693 -685 203228 X 37 8620959 3286840 4347665 611325 871986 508961 8216078 10380042 PURCHASED POWER 59994324 DISTRIBUTION EXPENSE 5671332 CONSUMER EXPENSE 5520794 ADMIN & GENERAL EXPENSE 3428374 1726192 113184909 1879670 2318131 5869172 7064132 73630 73630 205407 438063 4021874 5304310 404768874 38288786 298914088 366480088 52627053 58678557 8228634 12566430 371819528 452923341 11769811 11317252 11848470 11434437 27851 27002 217980853 290434381 5914492 7180712 247541477 320393784 X 3204960 3513140 0 0 121073091 129016417 124278051 132529557 371819528 452923341 X -880673 9132179 X X 0 1 X 0 0 0 1 X 8150867 8150867 30296860 4957527 25339333 254736412 33331259 221405153 111584735 111584735 366480088 PATRONAGE CAPITAL - CFC 504906 C PATRONAGE CAPITAL - TEC 714735 C PATRONAGE CAPITAL - BEPC 35919205 C PATRONAGE CAPITAL - OTHER 383143 C CAPITAL TERM CERTIFICATES - CFC 481833 C COBANK E-STOCK 6525449 C SCHOLARSHIP FUND 10412 C ECONOMIC DEVELOPMENT FUND 10787 C OTHER INVESTMENTS 65500 C INVESTMENTS IN AFFILIATED COMPANY - MSEC 14062587 C 58678557 CONSUMER DEPOSITS 2656692 UNBILLED POWER COST 1393000 OTHER CURRENT AND ACCRUED LIABILITIES 981296 DEFERRED CREDIT - UNCLAIMED PROPERTY 514022 DUE TO AFFILIATED COMPANIES 189003 ACCRUED OPERATING TAXES 1446699 7180712 X PART IV, LINE 2B: PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE HAS ESTABLISHED A RURAL SCHOLARSHIP FUND WITH RETIREMENTS OF PATRONAGE CAPITAL, WHICH HAVE REMAINED UNCLAIMED FOR A PERIOD OF THREE YEARS. THE AMOUNTS DEPOSITED INTO THE RURAL SCHOLARSHIP FUND ARE APPROVED BY THE STATE OF TEXAS AND CAN ONLY BE USED FOR SCHOLARSHIPS TO ENABLE STUDENTS FROM RURAL AREAS TO ATTEND COLLEGE, TECHNICAL SCHOOL OR OTHER POST SECONDARY EDUCATION INSTITUTION. ANY AMOUNTS SO DEPOSITED INTO THE RURAL SCHOLARSHIP FUND ARE STILL PAYABLE TO THE PERSON TO WHOM THE ORIGINAL PAYMENT WAS MADE BUT UNCLAIMED. ALSO PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE HAS ESTABLISHED AN ECONOMIC DEVELOPMENT FUND WITH RETIREMENTS OF PATRONAGE CAPITAL, WHICH HAVE REMAINED UNCLAIMED FOR A PERIOD OF THREE YEARS. THE AMOUNTS DEPOSITED INTO THE ECONOMIC DEVELOPMENT FUND ARE APPROVED BY THE STATE OF TEXAS AND CAN ONLY BE USED FOR THE STIMULATION AND IMPROVEMENT OF BUSINESS AND COMMERCIAL ACTIVITY FOR ECONOMIC DEVELOPMENT IN RURAL COMMUNITIES. ANY AMOUNTS SO DEPOSITED INTO THE ECONOMIC DEVELOPMENT FUND ARE STILL PAYABLE TO THE PERSON TO WHOM THE ORIGINAL PAYMENT WAS MADE BUT UNCLAIMED. ALSO PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE HAS ESTABLISHED AN ENERGY EFFICIENCY ASSISTANCE FUND WITH RETIREMENTS OF PATRONAGE CAPITAL, WHICH HAVE REMAINED UNCLAIMED FOR A PERIOD OF THREE YEARS. THE AMOUNTS DEPOSITED INTO THE ENERGY EFFICIENCY ASSISTANCE FUND ARE APPROVED BY THE STATE OF TEXAS AND CAN ONLY BE USED TO ASSIST MEMBERS OF AN ELECTRIC COOPERATIVE IN REDUCING THEIR ENERGY CONSUMPTION AND ELECTRICITY BILLS. ANY AMOUNTS SO DEPOSITED INTO THE ENERGY EFFICIENCY ASSISTANCE FUND ARE STILL PAYABLE TO THE PERSON TO WHOM THE ORIGINAL PAYMENT WAS MADE BUT UNCLAIMED. PART X, LINE 2: THE COOPERATIVE FOLLOWS THE "UNCERTAIN TAX POSITIONS" PROVISIONS OF ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA. THE PRIMARY TAX POSITION OF THE COOPERATIVE IS ITS FILING STATUS AS A TAX EXEMPT ENTITY. THE COOPERATIVE DETERMINED THAT IT IS MORE LIKELY THAN NOT THAT ITS TAX POSITION WILL BE SUSTAINED UPON EXAMINATION BY THE INTERNAL REVENUE SERVICE (IRS), OR OTHER STATE TAXING AUTHORITY, AND THAT ALL TAX BENEFITS ARE LIKELY TO BE REALIZED UPON SETTLEMENT WITH TAXING AUTHORITIES. PART IX: THE AMOUNT OF OTHER ASSETS ON FORM 990, PAGE 11, PART X, LINE 15 DOES NOT EQUAL OR EXCEED 5% OF THE TOTAL ASSETS ON FORM 990, PAGE 11, PART X, LINE 16, COLUMN B. CONSEQUENTLY, IN ACCORDANCE WITH IRS INSTRUCTIONS, SCHEDULE D, PART IX HAS BEEN LEFT BLANK. X X X X 0 0 0 KERRY KELTON GENERAL MANAGER/CEO 377795 0 29290 0 52750 0 107810 0 24523 0 592168 0 0 0 TROY MORRIS SR. VICE PRESIDENT 195340 0 34745 0 55015 0 108332 0 24991 0 418423 0 0 0 MIKE MCDOUGALD SR. VICE PRESIDENT 193758 0 30389 0 58290 0 83178 0 26902 0 392517 0 0 0 ANDREW DALLMEYER SR. VICE PRESIDENT 166144 0 27682 0 40033 0 58887 0 24449 0 317195 0 0 0 DENNIS GILMORE SR. VICE PRESIDENT 151275 0 29384 0 40135 0 56224 0 25878 0 302896 0 0 0 DAVID WILLIAMS VP OPERATIONS 146368 0 25164 0 38341 0 56348 0 23901 0 290122 0 0 0 MELANIE CABALLERO VP COMPLIANCE, REGULATORY & SUPPORT 118744 0 8909 0 36068 0 56909 0 22372 0 243002 0 0 0 DIANNE SECHELSKI VP BILLING 108762 0 10538 0 21164 0 46294 0 18034 0 204792 0 0 0 RUSSELL SMITH CORPORATE COUNSEL 142202 0 10236 0 25832 0 24944 0 1530 0 204744 0 0 0 BRANDON NORTHCUT VP TECHNOLOGY 120050 0 9745 0 22701 0 26845 0 23316 0 202657 0 0 0 MICHAEL LONG SR. MANAGER PROJECTS & DEVELOPMENT 107737 0 8543 0 15034 0 34623 0 21573 0 187510 0 0 0 CATHY BARKER SR. HUMAN RESOURCES MANAGER 100845 0 13492 0 18605 0 29955 0 21897 0 184794 0 0 0 JARED ANDERSON LINE FOREMAN 119489 0 6849 0 207 0 25389 0 24685 0 176619 0 0 0 JOSH TURKNETT WATER CREW LEADER 118963 0 6707 0 8678 0 20055 0 19702 0 174105 0 0 0 JAMES IDOM SYSTEM OPERATIONS SUPERVISOR 103004 0 10677 0 14530 0 21163 0 13887 0 163261 0 0 0 PART II, COLUMN C: INCLUDED IN THIS AMOUNT IS THE INCREASE IN ACTUARIAL VALUE OF BENEFITS PAYABLE UNDER A DEFINED BENEFIT RETIREMENT PLAN. THE CONTRIBUTION RATE FOR PARTICIPANTS IN THE NRECA R&S DEFINED BENEFIT PENSION PLAN ARE THE SAME FOR ALL INDIVIDUALS IN THIS MULTI-EMPLOYER PLAN. THE CHANGE IN ACTUARIAL VALUE FOR EACH PARTICIPANT, HOWEVER, VARIES WITH AGE, YEARS OF SERVICE AND THE CURRENT INTEREST RATE ENVIRONMENT. IN OTHER WORDS, THE OLDER A PLAN PARTICIPANT IS, THE GREATER THE INCREASE IN THAT INDIVIDUAL'S CHANGE IN ACTUARIAL VALUE, ALL OTHER THINGS BEING EQUAL. BECAUSE THIS RELATES TO A MULTI-EMPLOYER PLAN, CASH CONTRIBUTIONS TO THE PLAN IN LIEU OF THE ACTUARIAL INCREASE ARE EXPENSED IN THE FINANCIAL STATEMENTS. KERRY KELTON: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 88,072 EMPLOYER CONTRIBUTION TO 401(K) PLAN 19,738 TOTAL REPORTED IN COLUMN C $ 107,810 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (88,072) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 67,363 EXPENSE TO THE COOPERATIVE $ 87,101 TROY MORRIS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 91,334 EMPLOYER CONTRIBUTION TO 401(K) PLAN 16,998 TOTAL REPORTED IN COLUMN C $ 108,332 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (91,334) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 35,695 EXPENSE TO THE COOPERATIVE $ 52,693 MIKE MCDOUGALD: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 71,310 EMPLOYER CONTRIBUTION TO 401(K) PLAN 11,868 TOTAL REPORTED IN COLUMN C $ 83,178 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (71,310) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 35,738 EXPENSE TO THE COOPERATIVE $ 47,606 ANDREW DALLMEYER: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 48,895 EMPLOYER CONTRIBUTION TO 401(K) PLAN 9,992 TOTAL REPORTED IN COLUMN C $ 58,887 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (48,895) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 30,537 EXPENSE TO THE COOPERATIVE $ 40,529 DENNIS GILMORE: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 41,588 EMPLOYER CONTRIBUTION TO 401(K) PLAN 14,636 TOTAL REPORTED IN COLUMN C $ 56,224 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (41,588) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 28,243 EXPENSE TO THE COOPERATIVE $ 42,879 DAVID WILLIAMS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 46,375 EMPLOYER CONTRIBUTION TO 401(K) PLAN 9,973 TOTAL REPORTED IN COLUMN C $ 56,348 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (46,375) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 27,022 EXPENSE TO THE COOPERATIVE $ 36,995 MELANIE CABALLERO: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 46,045 EMPLOYER CONTRIBUTION TO 401(K) PLAN 10,864 TOTAL REPORTED IN COLUMN C $ 56,909 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (46,045) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 22,702 EXPENSE TO THE COOPERATIVE $ 33,566 DIANNE SECHELSKI: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 36,953 EMPLOYER CONTRIBUTION TO 401(K) PLAN 9,341 TOTAL REPORTED IN COLUMN C $ 46,294 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (36,953) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 20,209 EXPENSE TO THE COOPERATIVE $ 29,550 RUSSELL SMITH: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 13,449 EMPLOYER CONTRIBUTION TO 401(K) PLAN 11,495 TOTAL REPORTED IN COLUMN C $ 24,944 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (13,449) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 24,906 EXPENSE TO THE COOPERATIVE $ 36,401 BRANDON NORTHCUT: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 16,274 EMPLOYER CONTRIBUTION TO 401(K) PLAN 10,571 TOTAL REPORTED IN COLUMN C $ 26,845 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (16,274) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 22,600 EXPENSE TO THE COOPERATIVE $ 33,171 MICHAEL LONG: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 25,358 EMPLOYER CONTRIBUTION TO 401(K) PLAN 9,265 TOTAL REPORTED IN COLUMN C $ 34,623 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (25,358) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 19,899 EXPENSE TO THE COOPERATIVE $ 29,164 CATHY BARKER: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 27,283 EMPLOYER CONTRIBUTION TO 401(K) PLAN 2,672 TOTAL REPORTED IN COLUMN C $ 29,955 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (27,283) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 18,762 EXPENSE TO THE COOPERATIVE $ 21,434 JARED ANDERSON: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 16,562 EMPLOYER CONTRIBUTION TO 401(K) PLAN 8,827 TOTAL REPORTED IN COLUMN C $ 25,389 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (16,562) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 22,540 EXPENSE TO THE COOPERATIVE $ 31,367 JOSH TURKNETT: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 10,732 EMPLOYER CONTRIBUTION TO 401(K) PLAN 9,323 TOTAL REPORTED IN COLUMN C $ 20,055 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (10,732) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 21,621 EXPENSE TO THE COOPERATIVE $ 30,944 JAMES IDOM: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 12,911 EMPLOYER CONTRIBUTION TO 401(K) PLAN 8,252 TOTAL REPORTED IN COLUMN C $ 21,163 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (12,911) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 18,680 EXPENSE TO THE COOPERATIVE $ 26,932 MIKE MCDOUGALD FAMILY RELATIONSHIP - DIRECTOR (K. MCDOUGALD) 282437 EMPLOYMENT 0 KENNETH MCDOUGALD FAMILY RELATIONSHIP - OFFICER (M. MCDOUGALD) 11750 DIRECTOR 0 FORM 990, PART I: 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 LOSS OF $880,673, WHICH IS THE INCOME STATEMENT EFFECT OF ACCRUED UNBILLED REVENUE AND POWER COST. THE GAAP BASIS FINANCIAL STATEMENTS INCLUDE AN ACCRUAL FOR UNBILLED REVENUE AND POWER COST 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. DUE TO THE TIMING OF WHEN THE COOPERATIVE ALLOCATES ACCRUED UNBILLED REVENUE AND POWER COST, PAGE 1, PART I, LINE 19 ANNUALLY REPORTS NET INCOME EQUAL TO THE NET INCREASE IN ACCRUED UNBILLED REVENUE AND POWER COST OR A NET LOSS EQUAL TO THE NET DECREASE IN UNBILLED REVENUE AND POWER COST. THE FOLLOWING SCHEDULE IS PROVIDED TO FURTHER EXPLAIN THE IMPACT OF THIS TRANSACTION: ADD: UNBILLED REVENUE AND POWER COST 12/31/21 $ 4,984,000 LESS: UNBILLED REVENUE AND POWER COST 12/31/20 (5,322,000) NET INCREASE IN UNBILLED REVENUE AND POWER COST $ (338,000) LESS: EQUITY METHOD INCOME FROM SUBSIDIARIES (542,673) (A) - NET INCOME ON PAGE 1, PART I, LINE 19 $ (880,673) (B) - BENEFITS PAID TO MEMBERS (I.E. PATRONAGE DIVIDENDS), PART I, LINE 14 $ 8,656,322 (C) - EQUITY METHOD FROM SUBSIDIARIES 542,673 2021 NET MARGIN PER FINANCIAL STATEMENTS (A + B + C) $ 8,318,322 FORM 990, PART VI, SECTION A, LINE 2 KENNETH MCDOUGALD, DIRECTOR, HAS A FAMILY RELATIONSHIP WITH MICHAEL MCDOUGALD, EMPLOYEE OFFICER. FORM 990, PART VI, SECTION A, LINE 6 THE COOPERATIVE WAS FORMED BY THE MEMBERS TO PROVIDE ELECTRIC SERVICE AT COST ON A COOPERATIVE BASIS. FORM 990, PART VI, SECTION A, LINE 7A THE MEMBERS OF THE COOPERATIVE VOTE ON THE BOARD OF DIRECTORS. ELECTIONS ARE DONE ON A ONE MEMBER ONE VOTE BASIS. FORM 990, PART VI, SECTION A, LINE 7B 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 FORM 990, PART VI, SECTION A, LINE 8B 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". FORM 990, PART VI, SECTION B, LINE 11B MANAGEMENT PRESENTED A COPY OF THE FORM 990 TO THE BOARD FOR DISCUSSION AND REVIEW PRIOR TO FILING. FORM 990, PART VI, SECTION B, LINE 12C ON AN ANNUAL BASIS, THE COOPERATIVE WILL REQUIRE THE BOARD OF DIRECTORS AND ITS OFFICERS TO COMPLETE AND SIGN A CONFLICT OF INTEREST CERTIFICATION AND DISCLOSURE FORM. THE BOARD OF DIRECTORS WILL ALSO COMPLETE AND SIGN THE FORM 990 DISCLOSURE QUESTIONNAIRE. THE SIGNED COPIES WILL BE KEPT IN THE PERSONNEL FILE FOR EACH INDIVIDUAL. FORM 990, PART VI, SECTION B, LINE 15 THE BOARD OF DIRECTORS USE THE EXPERTISE OF AN INDEPENDENT COMPENSATION CONSULTANT, A COMPENSATION SURVEY AND COMPARE COMPENSATION REPORTED ON OTHER COOPERATIVE'S IRS FORMS 990 WHEN DETERMINING THE COMPENSATION OF THE GENERAL MANAGER/CEO. THE SURVEY SHOWS COMPARATIVE SALARIES FOR GENERAL MANAGERS/CEOS FROM COOPERATIVES LOCATED IN TEXAS AND THE NATION. THE GENERAL MANAGER/CEO USES THE EXPERTISE OF AN INDEPENDENT COMPENSATION CONSULTANT, A COMPENSATION SURVEY AND COMPARE COMPENSATION REPORTED ON OTHER COOPERATIVE'S IRS FORMS 990 WHEN DETERMINING THE COMPENSATION OF THE COOPERATIVE'S OTHER EMPLOYEES MEETING THE DEFINITION OF OFFICER AND KEY EMPLOYEES, IF ANY. THE SURVEY INCLUDES SALARIES FROM SIMILAR COOPERATIVES THROUGHOUT TEXAS AND THE NATION. FORM 990, PART VI, SECTION C, LINE 19 THE COOPERATIVE WILL PROVIDE A COMPLETE COPY OF THE AUDITED FINANCIAL STATEMENTS, CONFLICT OF INTEREST POLICY, OR GOVERNING DOCUMENTS TO ANY MEMBER WHO REQUESTS A COPY. FORM 990, PART VII, COLUMN F: 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 AND LIFE INSURANCE TO ALL EMPLOYEES, INCLUDING OFFICERS AND HIGHLY COMPENSATED EMPLOYEES, THROUGH A QUALIFIED PLAN. THE AMOUNTS REPORTED ON PART VII, COLUMN (F) FOR THE EMPLOYEE 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 INSURANCE PAID ON BEHALF OF AND FOR THEIR BENEFIT. ALL BENEFITS ARE FOR EMPLOYEES ONLY. THE BOARD OF DIRECTORS DO NOT RECEIVE ANY OF THE BENEFITS LISTED ABOVE. FORM 990, PART VIII, LINE 2: 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. FORM 990, PART IX: ALTHOUGH THE COOPERATIVE IS NO LONGER A RURAL UTILITIES SERVICE (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. FORM 990, PART IX, LINES 5-7: 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 $ 7,634,505 LESS: DIRECTOR FEES REPORTED ON FORMS 1099-NEC (118,314) LESS: EMPLOYEE OFFICER BENEFITS INCLUDED IN LINE 5 (841,677) PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 4,270,008 PLUS: SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 2,957,072 TOTAL WAGES ACCRUED AND/OR PAID $13,901,594 FORM 990, PART IX, LINE 24: ADMINISTRATIVE & GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL SALARIES, BENEFITS, & OTHER $ 3,716,314 OFFICE SUPPLIES 467,059 OUTSIDE SERVICES 150,542 DIRECTORS 264,372 SAFETY/TRAINING 1,050,413 MEETINGS 79,982 REGULATORY COMMISSION EXPENSES 159,650 MAINTENANCE OF GENERAL PLANT 1,225,056 MISCELLANEOUS GENERAL EXPENSE 439,141 TOTAL ADMIN & GENERAL EXP PER FINANCIAL STATEMENTS $ 7,552,529 LESS: RECLASS OF TOWER EXPENSE TO PART VIII, LINE 6B (685) LESS: RECLASS OF DIRECTOR FEES TO PART IX, LINE 5 (118,314) LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (2,811,440) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (1,193,716) TOTAL ADMIN & GENERAL EXPENSE PER FORM 990, PART IX $ 3,428,374 FORM 990, PART IX, LINE 4: 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 2021 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. FORM 990, PART IX, LINE 24E: OTHER EXPENSES ARE COMPRISED OF THE FOLLOWING: INVENTORY ADJUSTMENT $ 363,983 INTERNET EXPENSE - MSEC 584,652 SALES 729,416 OTHER DEDUCTIONS 48,141 TOTAL OTHER EXPENSES PER FROM 990, LINE 24E $ 1,726,192 FORM 990, PART XI, LINE 9: NET CHANGE IN MEMBERSHIPS 308,180. NET INCOME FROM EQUITY METHOD INVESTMENTS 578,036. PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 8,620,959. PATRONAGE CAPITAL RETIRED - TOTAL -2,655,435. PATRONAGE CAPITAL RETIRED - DISCOUNTED 2,280,439. FORM 990, PART XII, LINE 2C: 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. 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