2018-10-17T09:40:40-05:00 2017-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2017-01-01 740811772 NUECES ELECTRIC COOPERATIVE INC NUEC 3613872581 14353 COOPERATIVE AVE ROBSTOWN TX 78380 TRACE MCCUAN CEO 3613872581 2018-10-12 1 WILLIAM M MILLER P00439459 8067473806 2018-10-12 X 65.182.80.152 2018-10-12 16:19:53 CD P B203D40F61B6B7195294B4E759D44885CEF08510 587A88673713A033F58E04FDF6801CBB1F7DD2F2 2017 2018-06-14 16:35:46Z TRACE MCCUAN 14353 COOPERATIVE AVE ROBSTOWN TX 78380 112227307 0 X WWW.NUECESELECTRIC.ORG X 1939 TX TO PROVIDE QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS AT COST ON A COOPERATIVE BASIS. 10 10 97 0 0 0 0 0 99735781 111209870 385546 887194 45960 64738 100167287 112161802 10379 52936 8921595 12307101 5445958 6057022 0 0 0 85302736 92810003 99680668 111227062 486619 934740 176131370 186837286 94937634 94375264 81193736 92462022 THE MISSION OF NUECES ELECTRIC COOPERATIVE, INC, A MEMBER-OWNED COOPERATIVE, IS TO HELP OUR MEMBERS CONTINUALLY IMPROVE THEIR QUALITY OF LIFE BY PROVIDING RELIABLE AND COST EFFECTIVE ELECTRIC SERVICE. 0 0 PROVIDING ELECTRIC ENERGY TO OUR MEMBERS - 42,774 ACTIVE SERVICES AT YEAR END WERE PROVIDED ELECTRICITY ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. 0 0 0 0 0 0 0 1 0 1 1 1 0 1 1 1 0 0 0 0 0 0 0 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 1 87 0 97 1 0 0 0 0 0 109219502 3026036 0 X 10 10 0 0 1 0 1 1 1 1 0 1 0 1 1 1 1 1 1 1 1 0 X X ADRIANA PENA CFO 3613872581 14353 COOPERATIVE AVE ROBSTOWN TX 78380 X BRIAN MENKING PRESIDENT 3.00 X X 21950 0 0 LOUIS W HARTMAN VICE PRESIDENT 6.00 X X 19825 0 0 DAVID ROSSE SECRETARY/TREASURER 9.70 1.00 X X 21325 0 0 TOMMY ERMIS ASST SECRETARY/TREASURER 9.60 X X 21025 0 0 DONALD WAYNE HERRMANN DIRECTOR 2.70 X 16200 0 0 MAXINE STEWART DIRECTOR 2.30 1.00 X 15900 0 0 RUMALDO JUAREZ DIRECTOR 5.00 X 20425 0 0 GREGG TRUESDALE DIRECTOR 3.80 X 18825 0 0 GLADYS LIPPINCOTT DIRECTOR 4.20 1.00 X 18325 0 0 JUAN ALVARADO DIRECTOR 6.00 X 19825 0 0 TRACE L MCCUAN CEO 47.00 X 216858 0 61317 ADRIANA PENA CFO 46.00 X 111652 0 50787 VARZAVAND IRANI COO 50.00 X 137683 0 43599 SARAH FISHER CCO 49.00 X 125078 0 85190 FRANK WILSON CRO 45.00 X 107934 0 57893 ROBERT HOLLOWAY LINEMAN 52.00 X 122209 0 36012 JUAN GUZMAN LINEMAN 48.00 X 109369 0 32236 JUAN RIVERA LINEMAN 52.00 X 122377 0 39536 ROLAND TREVINO LINEMAN 45.00 X 104244 0 40158 RAYMUNDO PINA LINEMAN 46.00 X 105916 0 33974 1456945 0 480702 10 0 1 0 LINETEC SERVICES INC PO BOX 13650 ALEXANDRIA LA 71315 LINE CONSTRUCTION 1259586 MOREHEAD DOTTS & ASSOCIATES 2767 SANTA FE CORPUS CHRISTI TX 78404 ADVERTISING 1182349 ASPLUNDH TREE EXPERT CO 1700 SOLUTION CENTER CHICAGO IL 60677 TREE TRIMMING 481324 LAND CLEARING SOLUTIONS LLC 3636 S ALAMEDA ST B-105 CORPUS CHRISTI TX 78411 RIGHT OF WAY CLEARING 264760 QPI&M INC PO BOX 947 EDNA TX 77957 POLE INSPECTIONS 255321 10 X SALES OF ELECTRICITY 221000 105217375 105217375 PATRONAGE DIVIDENDS 221000 3976054 3976054 DISTRIBUTION SERVICES 221000 1413269 1413269 SERVICE FEES 221000 552169 552169 OTHER PROGRAM REVENUE 221000 51003 51003 111209870 863495 863495 1725 0 1725 1725 1725 24606 907 23699 23699 23699 83112 64598 18514 18514 POLE ATTACHMENT INCOME 221000 44499 44499 44499 112161802 111228384 0 933418 X 52936 12307101 1191616 3297410 452005 812623 303368 2958250 3867335 PURCHASED POWER 74267927 ADMIN & GENERAL EXPENSE 3670104 CONSUMER EXPENSE 3193046 DISTRIBUTION EXPENSE 2809764 2043577 111227062 691877 1950333 1585876 4390705 2173621 2276501 1809479 1536269 139730194 26168708 113620864 113561486 19569219 22257151 32001076 35173384 4679358 5691457 176131370 186837286 8103879 8155751 5830507 5821670 333469 317733 74939218 74398374 5730561 5681736 94937634 94375264 X 430310 424450 0 0 80763426 92037572 81193736 92462022 176131370 186837286 X 934740 10333546 X X 0 1 X 1 0 0 1 X 1303888 1303888 27927654 3800277 24127377 109431752 22368431 87063321 1066900 1066900 113561486 TREASURY STRIPS 22257151 C 22257151 CAPITAL TERM CERTIFICATES 738569 C PATRONAGE CAPITAL - STEC 30006435 C PATRONAGE CAPITAL - CFC 226375 C PATRONAGE CAPITAL - TEC 697186 C PATRONAGE CAPITAL - NISC 146132 C PATRONAGE CAPITAL - COBANK 1538803 C PATRONAGE CAPITAL - FEDERATED 367974 C PATRONAGE CAPITAL - CRC 24915 C PATRONAGE CAPITAL - NRTC 108448 C OTHER INVESTMENTS - RESTRICTED ENERGY DEPOSIT & SCHOLARSHIP FUND 1316412 C MEMBERSHIPS IN ASSOCIATED ORGANIZATIONS 2135 C 35173384 CONSUMER DEPOSITS 2134338 ADVANCES FOR CONSTRUCTION 1976523 UNCLAIMED PATRONAGE CAPITAL PAYABLE 1167404 ACCRUED OPERATING TAXES 403471 5681736 X 111574296 60000 60000 111514296 647506 647506 112161802 98332455 60000 60000 98272455 12954607 12954607 111227062 PART IV, LINE 2B: PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE HAS ESTABLISHED A RURAL SCHOLARSHIP FUND WITH AMOUNTS DESIGNATED UNCLAIMED UNDER STATE LAW. 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. PART X, LINE 2: THE COOPERATIVE ADOPTED 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, OR OTHER STATE TAXING AUTHORITY AND THAT ALL TAX BENEFITS ARE LIKELY TO BE REALIZED UPON SETTLEMENT WITH TAXING AUTHORITIES. PART XI, LINE 2D - OTHER ADJUSTMENTS: OFFSET OF INTER-DIVISIONAL RENT REVENUE AND EXPENSE 60,000. PART XI, LINE 4B - OTHER ADJUSTMENTS: NON-OPERATING CONTRACT EXPENSE RECLASSIFIED AS FORM 990 EXPENSE 647,506. PART XII, LINE 2D - OTHER ADJUSTMENTS: OFFSET OF INTER-DIVISIONAL RENT REVENUE AND EXPENSE 60,000. PART XII, LINE 4B - OTHER ADJUSTMENTS: NON-OPERATING CONTRACT EXPENSE RECLASSIFIED AS FORM 990 EXPENSE 647,506. PATRONAGE CAPITAL ASSIGNABLE 12,307,101. PART IX: THE AMOUNT OF OTHER ASSETS ON FORM 990, PAGE 11, PART X, LINE 15 DOES NOT EQUAL OR EXCEED 5 PERCENT OF THE TOTAL ASSETS ON FORM 990, PAGE 11, PART X, LINE 16, COLUMN B. THEREFORE, IN ACCORDANCE WITH IRS INSTRUCTIONS SCHEDULE D, PART IX HAS BEEN LEFT BLANK. PART XII, LINE 4B: FOR THE AUDITED FINANCIAL STATEMENTS, THE AMOUNT OF PATRONAGE DIVIDENDS PAID OR ALLOCATED TO THE MEMBERS IS REPORTED AS AN INCREASE IN EQUITY AND NOT AS AN EXPENSE. THEREFORE, NET INCOME PER THE AUDITED FINANCIAL STATEMENTS IS REPORTED GROSS OF THE AMOUNT OF PATRONAGE DIVIDENDS THAT ARE EITHER ALLOCATED OR TO BE ALLOCATED AT THE TIME THE AUDITED FINANCIAL STATEMENTS ARE PREPARED. HOWEVER, BECAUSE THE ALLOCATION OF PATRONAGE DIVIDENDS IS ONE ASPECT OF HOW THE COOPERATIVE FULFILLS ITS TAX EXEMPT PURPOSE OF OPERATING ON A COOPERATIVE BASIS, THE AMOUNT OF PATRONAGE DIVIDENDS EITHER ALLOCATED OR TO BE ALLOCATED TO THE MEMBERS IS REPORTED ON FORM 990, PART IX, LINE 4 AS "BENEFITS PAID TO MEMBERS". PATRONAGE DIVIDENDS ARE ALLOCATED ON A PATRONAGE BASIS AND DONE SO PURSUANT TO A PRE-EXISTING OBLIGATION AS PROVIDED FOR IN THE "NON-PROFIT OPERATION" ARTICLE OF THE COOPERATIVE'S BYLAWS. 0 BUCCANEER COMMISSION INC PO BOX 30404 CORPUS CHRISTI TX 784630404 741144093 501(C)(3) 7500 2017 BUC DAYS MILITARY APPRECIATION NIGHT SPONSORSHIP MORALE WELFARE & RECREATION - NAVAL AIR STATION KINGSVILLE 601 NIMITZ AVE BLDG 3766 NAVAL AIR STATION KINGSVILLE TX 78363 741871775 GOVERNMENT 17500 MULTIPLE EVENT SPONSORSHIPS 1 2 FROM 990,SCHEDULE I, PART IV: ALL GRANTS, SPONSORSHIPS AND 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. X X X X 0 0 0 TRACE L MCCUAN CEO 206050 0 769 0 10039 0 47559 0 13758 0 278175 0 0 0 ADRIANA PENA CFO 108843 0 2437 0 372 0 22905 0 27882 0 162439 0 0 0 VARZAVAND IRANI COO 133610 0 533 0 3540 0 17751 0 25848 0 181282 0 0 0 SARAH FISHER CCO 122191 0 1587 0 1300 0 57399 0 27791 0 210268 0 0 0 FRANK WILSON CRO 107004 0 437 0 493 0 32045 0 25848 0 165827 0 0 0 ROBERT HOLLOWAY LINEMAN 121441 0 474 0 294 0 11566 0 24446 0 158221 0 0 0 JUAN RIVERA LINEMAN 120776 0 1325 0 276 0 15108 0 24428 0 161913 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 ENVIORNMENT. 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. TRACE MCCUAN: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 40,864 EMPLOYER CONTRIBUTION TO 401(K) PLAN 6,695 TOTAL REPORTED IN COLUMN C $ 47,559 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (40,864) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 35,883 EXPENSE TO THE COOPERATIVE $ 42,578 ADRIANA PENA: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 19,219 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,686 TOTAL REPORTED IN COLUMN C $ 22,905 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (19,219) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 14,516 EXPENSE TO THE COOPERATIVE $ 18,202 VARZAVAND IRANI: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 13,262 EMPLOYER CONTRIBUTION TO 401(K) PLAN 4,489 TOTAL REPORTED IN COLUMN C $ 17,751 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (13,262) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 24,861 EXPENSE TO THE COOPERATIVE $ 29,350 SARAH FISHER: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 53,287 EMPLOYER CONTRIBUTION TO 401(K) PLAN 4,112 TOTAL REPORTED IN COLUMN C $ 57,399 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (53,287) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 22,768 EXPENSE TO THE COOPERATIVE $ 26,880 FRANK WILSON: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 28,478 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,567 TOTAL REPORTED IN COLUMN C $ 32,045 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (28,478) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 19,771 EXPENSE TO THE COOPERATIVE $ 23,338 ROBERT HOLLOWAY: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 9,149 EMPLOYER CONTRIBUTION TO 401(K) PLAN 2,417 TOTAL REPORTED IN COLUMN C $ 11,566 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (9,149) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 13,396 EXPENSE TO THE COOPERATIVE $ 15,813 JUAN RIVERA: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 12,691 EMPLOYER CONTRIBUTION TO 401(K) PLAN 2,417 TOTAL REPORTED IN COLUMN C $ 15,108 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (12,691) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 13,396 EXPENSE TO THE COOPERATIVE $ 15,813 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 INCOME OF $934,740, WHICH IS THE INCOME STATEMENT EFFECT OF ACCRUED UNBILLED REVENUE. 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. DUE TO THE TIMING OF WHEN THE COOPERATIVE ALLOCATES ACCRUED UNBILLED REVENUE, PAGE 1 , PART I, LINE 19 ANNUALLY REPORTS NET INCOME EQUAL TO THE NET INCREASE IN ACCRUED UNBILLED REVENUE OR A NET LOSS EQUAL TO THE NET DECREASE IN UNBILLED REVENUE. THE FOLLOWING SCHEDULE IS PROVIDED TO FURTHER EXPLAIN THE IMPACT OF THIS TRANSACTION: ADD: UNBILLED REVENUE 12/31/17 $ 5,605,833 LESS: UNBILLED REVENUE 12/31/16 (4,671,093) (A) - INCREASE EQUALS NET INCOME ON PAGE 1 $ 934,740 (B) - BENEFITS PAID TO MEMBERS (I.E. PATRONAGE DIVIDENDS), PART I, LINE 14 $12,307,101 TOTAL 2017 NET MARGIN (A + B) $13,241,841 FORM 990, PART VI, SECTION A, LINE 4 DURING THE YEAR, THE COOPERATIVE AMENDED ARTICLE I, SECTION 8 OF THE BYLAWS. THE AMENDMENT REMOVED THE REQUIREMENT THAT MEMBERSHIP LISTS MUST BE RETURNED TO THE COOPERATIVE WITHIN A REASONABLE AMOUNT OF TIME AFTER RECEIPT. 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. AMENDMENT TO THE ARTICLES OF INCORPORATION 2. DISPOSAL OF A SUBSTANTIAL PORTION OF THE COOPERATIVE'S ASSETS 3. DISSOLUTION AND LIQUIDATION OF THE COOPERATIVE 4. MERGER OR CONSOLIDATION OF THE COOPERATIVE WITH ANOTHER ORGANIZATION 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 DIRECTORS, OFFICERS AND KEY EMPLOYEES ARE REQUIRED TO DISCLOSE IMMEDIATELY ANY RELATIONSHIPS CONSIDERED TO BE A POSSIBLE CONFLICT OF INTEREST. FORM 990, PART VI, SECTION B, LINE 15 THE BOARD OF DIRECTORS USE THE EXPERTISE OF AN INDEPENDENT COMPENSATION CONSULTANT AND A COMPENSATION SURVEY WHEN DETERMINING THE COMPENSATION OF THE CEO. THE SURVEY SHOWS COMPARATIVE SALARIES FOR CEO'S/GENERAL MANAGERS FROM SIMILARLY SITUATED COOPERATIVES LOCATED IN TEXAS AND THE NATION. THE BOARD AND THE CEO USE THE EXPERTISE OF AN INDEPENDENT COMPENSATION CONSULTANT AND A COMPENSATION SURVEY 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 SIMILARLY SITUATED COOPERATIVES THROUGHOUT TEXAS AND THE NATION. FORM 990, PART VI, SECTION C, LINE 19 THE COOPERATIVE WILL PROVIDE A COMPLETE COPY OF ITS CONFLICT OF INTEREST POLICY TO ANY MEMBER REQUESTING A COPY. THE COOPERATIVE ALSO ANNUALLY PROVIDES A COPY OF THE AUDITED BALANCE SHEET AND INCOME STATEMENT TO THE MEMBERS OF THE COOPERATIVE WITH THE ANNUAL REPORT. ADDITIONALLY, THE BYLAWS, ARTICLES OF INCORPORATION, AND ANNUAL FINANCIAL REPORTS ARE ALSO POSTED TO THE COOPERATIVE'S WEBSITE. 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, DENTAL, VISION AND LIFE INSURANCE TO ALL ELIGIBLE EMPLOYEES THROUGH A QUALIFIED PLAN. THE AMOUNTS REPORTED ON PART VII, COLUMN (F) FOR THE OFFICERS 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. FORM 990, PART VIII, LINE 2B: 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 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. 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 THE TOTAL WAGES ACCRUED AND/OR PAID: TOTAL PER LINES 5-7 $ 4,489,026 LESS: DIRECTORS FEES REPORTED ON FORM 1099-MISC (193,625) LESS: EMPLOYEE OFFICER BENEFITS REPORTED ON LINE 5 (298,786) PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 1,372,805 PLUS: SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 369,806 TOTAL WAGES ACCRUED AND/OR PAID $ 5,739,226 FORM 990, PART IX, LINE 24: ADMINISTRATIVE & GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL $ 1,240,947 OFFICE SUPPLIES 653,955 OUTSIDE SERVICES 188,764 INSURANCES 397,956 REGULATORY COMMISSION 342,422 DIRECTORS 233,344 DUES AND SUBSCRIPTIONS 74,037 ANNUAL MEETING 173,957 ADVERTISING 1,492,815 MISCELLANEOUS GENERAL 316,971 MAINTENANCE OF GENERAL PLANT 347,549 TOTAL ADMIN & GENERAL EXP PER FINANCIAL STATEMENTS $ 5,462,717 LESS: RECLASS OF DIRECTOR FEES TO PART IX, LINE 5 (193,625) LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (1,049,008) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (489,980) LESS: OFFSET OF INTERDIVISION RENT INCOME (60,000) TOTAL ADMIN & GENERAL EXPENSE PER FORM 990, PART IX $ 3,670,104 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 2017 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: OTHER DEDUCTIONS $ 125,875 MILITARY PRIVATIZATION EXPENSES 647,506 PROPERTY TAXES 1,270,196 TOTAL OTHER EXPENSES PER FORM 990, PART IX $ 2,043,577 FORM 990, PART XI, LINE 9: PATRONAGE CAPITAL ASSIGNABLE 12,307,101. PATRONAGE CAPITAL RETIRED - TOTAL -2,027,042. PATRONAGE CAPITAL RETIRED - DISCOUNT 59,347. NET CHANGE IN MEMBERSHIPS -5,860. FORM 990, PART XII, LINE 2C: THE BOARD OF DIRECTORS HAVE ASSIGNED MEMBERS TO AN AUDIT COMMITTEE TO OVERSEE THE FINANCIAL STATEMENT AUDIT AND SELECT THE INDEPENDENT FINANCIAL STATEMENT AUDITOR. PROCEDURAL CHANGES DID NOT OCCUR DURING THE YEAR. NUECES ELECTRIC CHARITIES INC 14353 COOPERATIVE AVE ROBSTOWN TX 78380 742756238 BETTERING THE QUALITY OF LIFE OF CITIZENS WITHIN THE SERVICE AREA. TX 501(C)(3) LINE 7 NUECES ELECTRIC COOPERATIVE INC 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 0 0 NUECES ELECTRIC CHARITIES INC N N/A - UNDER $50,000 NUECES ELECTRIC CHARITIES INC O N/A - UNDER $50,000