2017-09-12T12:27:00-05:00 2016-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2016-01-01 740811772 NUECES ELECTRIC COOPERATIVE NUEC 3613872581 14353 COOPERATIVE AVE ROBSTOWN TX 78380 TRACE MCCUAN CEO 3613872581 2017-09-09 1 William M Miller P00439459 8067473806 2017-09-09 X 65.182.80.152 2017-09-09 08:59:55 CD P BB0A6EFF21CE0653C6B3B49029A3E11A3F81D504 F209397801A578BBC6965567C9535F5B1AD51342 2016 2021-01-29 14:40:06Z TRACE MCCUAN 14353 COOPERATIVE AVE ROBSTOWN TX 78380 101437202 0 X WWW.NUECESELECTRIC.ORG X 1939 TX TO PROVIDE QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS AT COST ON A COOPERATIVE BASIS. 10 10 100 0 0 0 0 0 87449594 99735781 727345 385546 70439 45960 88247378 100167287 12666 10379 10332368 8921595 5277234 5445958 0 0 0 72625110 85302736 88247378 99680668 0 486619 164384186 176131370 90315566 94937634 74068620 81193736 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 - 44,636 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 0 0 1 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 1 82 0 100 1 0 0 0 0 0 97235878 2724534 0 X 10 10 0 0 0 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 AVENUE ROBSTOWN TX 78380 X BRIAN MENKING PRESIDENT 2.30 X X 18025 0 0 LOUIS W HARTMAN VICE PRESIDENT 7.10 X X 18125 0 0 DAVID ROSSE SECRETARY-TREASURER 12.80 X X 18075 0 0 TOMMY ERMIS ASSISTANT SEC/TREAS 8.00 X X 17450 0 0 DONALD WAYNE HERRMANN DIRECTOR 3.40 X 18600 0 0 MAXINE STEWART DIRECTOR 3.80 1.00 X 18600 0 0 RUMALDO JUAREZ DIRECTOR 5.30 1.00 X 20150 0 0 GREGG TRUESDALE DIRECTOR 5.90 X 18525 0 0 GLADYS LIPPINCOTT DIRECTOR 6.30 1.00 X 20425 0 0 JUAN ALVARADO DIRECTOR 7.30 X 20100 0 0 TRACE L MCCUAN CEO 47.00 X 207522 0 17575 ADRIANA PENA CFO 44.00 X 80728 0 42983 JAMES SORRELL CFO (JAN-MARCH) 40.00 X 23678 0 7336 VARZAVAND IRANI COO 50.00 X 134097 0 43017 SARAH FISHER CCO 49.00 X 118930 0 73609 FRANK WILSON CRO 48.00 X 103993 0 51040 ROBERT HOLLOWAY JOURNEY LINEMAN 56.00 X 121641 0 33799 JUAN GUZMAN JOURNEY LINEMAN 40.00 X 116133 0 30473 JUAN RIVERA JOURNEY LINEMAN 40.00 X 114732 0 36518 ROLAND TREVINO JOURNEY LINEMAN 49.00 X 107351 0 36948 RAYMUNDO PINA JOURNEY LINEMAN 45.00 X 100306 0 31798 1417186 0 405096 9 0 1 0 LINETEC SERVICES INC PO BOX 13650 ALEXANDRIA LA 71315 LINE CONSTRUCTION 3338420 MOREHEAD DOTTS & ASSOCIATES 2767 SANTA FE CORPUS CHRISTI TX 78404 ADVERTISING 853178 ASPLUNDH TREE EXPERT CO 1700 SOLUTION CENTER CHICAGO IL 60677 TREE TRIMMING 627155 NATIONAL INFORMATION SOLUTIONS COOPERATI PO BOX 1147 MANDAN ND 58554 COMPUTER HOSTING/SERVICES 475706 RUBEN'S FLEET SERVICE 4730 LEOPARD ST CORPUS CHRISTI TX 78408 VEHICLE MAINTENANCE 284898 11 X ELECTRIC SALES 221000 93572724 93572724 PATRONAGE DIVIDENDS 221000 3607890 3607890 DISTRIBUTION SERVICES 221000 1701038 1701038 SERVICE FEES 221000 803346 803346 OTHER PROGRAM REVENUE 221000 50783 50783 99735781 737391 737391 2325 0 2325 2325 2325 836194 1188039 -351845 -351845 -351845 95144 81876 13268 13268 JOINT POLE RENTAL INCOME 221000 30367 30367 30367 100167287 99749049 0 418238 X 10379 8921595 1092583 2922966 420006 743113 267290 2564762 3395023 PURCHASED POWER 66734275 ADMIN & GENERAL EXPENSE 3509805 CONSUMER EXPENSE 3438028 DISTRIBUTION EXPENSE 3285574 2375269 99680668 X 232253 691877 1871682 1585876 2304519 2173621 2092048 1809479 138350695 24729831 107559937 113620864 16830695 19569219 29308578 32001076 4184474 4679358 164384186 176131370 8362690 8103879 5325975 5830507 326612 333469 71607916 74939218 4692373 5730561 90315566 94937634 X 427458 430310 0 0 73641162 80763426 74068620 81193736 164384186 176131370 X 486619 6638497 X X 0 1 X 1 0 0 1 X 1269382 1269382 27919212 3049292 24869920 102797671 21680539 81117132 6364430 6364430 113620864 TREASURY STRIPS 19569219 C 19569219 CAPITAL TERM CERTIFICATES 738569 C PATRONAGE CAPITAL - STEC 27157865 C PATRONAGE CAPITAL - CFC 211754 C PATRONAGE CAPITAL - TEC 608978 C PATRONAGE CAPITAL - NISC 129600 C PATRONAGE CAPITAL - COBANK 1386574 C PATRONAGE CAPITAL - FEDERATED 325754 C PATRONAGE CAPITAL - CRC 21956 C PATRONAGE CAPITAL - NRTC 18665 C OTHER INVESTMENTS - RESTRICTED ENERGY DEPOSIT & SCHOLARSHIP FUND 1399226 C MEMBERSHIPS 2135 C 32001076 CONSUMER DEPOSITS 2021183 ADVANCES FOR CONSTRUCTION 1961771 UNCLAIMED PATRONAGE CAPITAL PAYABLE 1207278 ACCRUED OPERATING TAXES 540329 5730561 X 99234161 60000 60000 99174161 993126 993126 100167287 89825947 60000 60000 89765947 9914721 9914721 99680668 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: OFFEST OF INTER-DIVISIONAL RENT REVENUE AND EXPENSE 60,000. Part XI, Line 4b - Other Adjustments: NON-OPERATING CONTRACT EXPENSE RECLASSIFIED AS FORM 990 EXPENSE 993,126. INTER-DIVISIONAL 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 993,126. PATRONAGE CAPITAL ASSIGNABLE 8,921,595. SCHEDULE D 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. X X X X 0 0 0 TRACE L MCCUAN CEO 198336 0 118 0 9068 0 6999 0 10576 0 225097 0 0 0 VARZAVAND IRANI COO 131519 0 257 0 2321 0 18428 0 24589 0 177114 0 0 0 SARAH FISHER CCO 117456 0 313 0 1161 0 46635 0 26974 0 192539 0 0 0 FRANK WILSON CRO 103185 0 339 0 469 0 26061 0 24979 0 155033 0 0 0 ROBERT HOLLOWAY JOURNEY LINEMAN 121289 0 160 0 192 0 9990 0 23809 0 155440 0 0 0 JUAN RIVERA JOURNEY LINEMAN 114206 0 259 0 267 0 12709 0 23809 0 151250 0 0 0 FORM 990, 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 $ 3,061 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,938 TOTAL REPORTED IN COLUMN C $ 6,999 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (3,061) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 2,989 EXPENSE TO THE COOPERATIVE $ 6,927 VARZAVAND IRANI: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 14,099 EMPLOYER CONTRIBUTION TO 401(K) PLAN 4,329 TOTAL REPORTED IN COLUMN C $ 18,428 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (14,099) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 23,895 EXPENSE TO THE COOPERATIVE $ 28,224 SARAH FISHER: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 42,680 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,955 TOTAL REPORTED IN COLUMN C $ 46,635 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (42,680) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 21,799 EXPENSE TO THE COOPERATIVE $ 25,754 FRANK WILSON: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 22,626 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,435 TOTAL REPORTED IN COLUMN C $ 26,061 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (22,626) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 18,931 EXPENSE TO THE COOPERATIVE $ 22,366 ROBERT HOLLOWAY: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 7,644 EMPLOYER CONTRIBUTION TO 401(K) PLAN 2,346 TOTAL REPORTED IN COLUMN C $ 9,990 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (7,644) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 13,000 EXPENSE TO THE COOPERATIVE $ 15,346 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 $486,619, 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: UNBILLED REVENUE 12/31/16 $ 4,671,093 UNBILLED REVENUE 12/31/15 4,184,474 INCREASE EQUALS AMOUNT ON LINE 19 (A) $ 486,619 NET MARGIN PER GAAP BASIS INCOME STATEMENT FOR THE CURRENT YEAR (B) $ 9,408,214 PART I, LINE 14 - BENEFITS PAID TO MEMBERS (I.E. PATRONAGE DIVIENDS) B - A $ 8,921,595 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; AND 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, REVIEW AND APPROVAL PRIOR TO FILING. Form 990, Part VI, Section B, line 12c OFFICERS, DIRECTORS, 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 GENERAL MANAGER. THE SURVEY SHOWS COMPARATIVE SALARIES FOR GENERAL MANAGERS FROM SIMILARLY SITUATED COOPERATIVES LOCATED IN TEXAS AND THE NATION. THE BOARD AND THE GENERAL MANAGER 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 BY-LAWS, ARTICLES OF INCORPORATION, AND ANNUAL FINANCIAL REPORTS ARE ALSO POSTED TO THE COOPERATIVE'S WEBSITE. Form 990, Part VII Contact Addresses for Officers, Directors, Etc JAMES SORRELL - 1251 COUNTY ROAD 327, GRANGER, TX 76530. 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 $ 4,015,549 LESS DIRECTORS FEES REPORTED ON 1099-MISC (188,075) LESS EMPLOYEE OFFICER BENEFITS REPORTED ON LINE 5 (235,560) PLUS SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 1,462,161 PLUS SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 328,866 TOTAL WAGES ACCRUED AND/OR PAID $ 5,382,941 Form 990, Part IX, Line 24 ADMINISTRATIVE AND GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: OFFICE AND SUPPLIES $ 646,267 OUTSIDE SERVICES 390,056 WORKMEN'S COMP, GENERAL LIABILITY AND OTHER INSURANCE 342,074 REGULATORY COMMISSION EXPENSES 266,712 DIRECTOR EXPENSES 48,342 DUES TO ASSOCIATED ORGANIZATIONS 127,436 ANNUAL MEETING EXPENSES 188,599 ADVERTISING EXPENSES 1,206,821 MAINTENANCE OF GENERAL PLANT 210,246 MISCELLANEOUS GENERAL EXPENSE 83,252 TOTAL ADMINISTRATIVE AND GENERAL EXPENSE PER 990 $3,509,805 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 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. Form 990, Part IX, Line 1 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. Form 990, Part IX, Line 24(e) ALL OTHER EXPENSES IN PART IX, LINE 24 ARE COMPRISED OF THE FOLLOWING: OTHER DEDUCTIONS $ 68,988 DISTRIBUTION EXPENSE - OTHER CONTRACT 993,126 PROPERTY TAXES 1,313,155 TOTAL OF ALL OTHER EXPENSES PER FORM 990 $2,375,269 Form 990, Part X, Lines 13 and 15 THE COOPERATIVE PREVIOUSLY INCLUDED OTHER RESTRICTED INVESTMENTS AS A COMPONENT OF OTHER ASSETS ON LINE 15 OF PART X. HOWEVER, FOR THE 2016 CALENDAR YEAR, THE COOPERATIVE BEGAN REPORTING THESE AMOUNTS ON LINE 13 IN ACCORDANCE WITH FORM 990 INSTRUCTIONS. TO INCREASE CONSISTENCY, RESTRICTED INVESTMENTS IN THE AMOUNT OF $1,621,103 FOR THE 2015 CALENDAR YEAR HAVE BEEN RECLASSED FROM LINE 15 TO LINE 13. Form 990, Part X, Lines 19 and 25 THE COOPERATIVE PREVIOUSLY INCLUDED REFUNDABLE ADVANCES FOR CONSTRUCTION AS A COMPONENT OF DEFERRED REVENUE ON LINE 19 OF PART X. HOWEVER, FOR THE 2016 CALENDAR YEAR, THE COOPERATIVE BEGAN REPORTING THESE AMOUNTS ON LINE 25 IN ACCORDANCE WITH FORM 990 INSTRUCTIONS. TO INCREASE CONSISTENCY, REFUNDABLE ADVANCES FOR CONSTRUCTION IN THE AMOUNT OF $1,798,399 FOR THE 2015 CALENDAR YEAR HAVE BEEN RECLASSED FROM LINE 19 TO LINE 25. Form 990, Part XI, line 9: NET CHANGE IN MEMBERSHIPS 2,852. PATRONAGE CAPITAL ASSIGNABLE 8,921,595. PATRONAGE CAPITAL RETIRED - TOTAL -2,435,178. PATRONAGE CAPITAL RETIRED - DISCOUNT 149,228. 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 CHARITIES INCORPORATED 14353 COOPERATIVE AVENUE ROBSTOWN TX 78380 742756238 BETTERING THE QUALITY OF LIFE OF CITIZENS WITHIN THE SERVICE AREA. TX 501(C)(3) 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 CHARITIES INCORPORATED N N/A - UNDER $50,000 NUECES CHARITIES INCORPORATED N N/A - UNDER $50,000