2014-08-19T10:45:50-05:00 2013-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2013-01-01 880106922 MT WHEELER POWER INC MTWH 7752898981 PO BOX 151000 ELY NV 89315 RANDY EWELL GENERAL MANAGER/CEO 7752898981 2014-08-06 1 Matt R Willis P00419741 8067473806 2014-08-06 X 2013 2015-11-30 17:44:51Z RANDY EWELL PO BOX 151000 ELY NV 89315 34583165 0 X WWW.MWPOWER.NET X 1963 NV TO PROVIDE QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS OF THE COOPERATIVE. 9 8 43 0 337977 97203 0 0 33753681 33995098 248307 176386 357449 353175 34359437 34524659 31633 16082 2666859 733054 2518175 2829004 0 0 0 28396632 30946519 33613299 34524659 746138 0 46018543 48654216 18397631 20735609 27620912 27918607 THE COOPERATIVE'S RESPONSIBILITY AND AIM IS TO PROVIDE EXCELLENT AND INNOVATIVE CUSTOMER SERVICE AS REFLECTED IN TOP QUALITY ELECTRIC SERVICE RELIABILITY, AFFORDABLE RATES, EMPLOYEE TEAMWORK AND THE HIGHEST DEGREE OF INTEGRITY IN ALL COOPERATIVE ENDEAVORS. 0 0 PROVIDING ELECTRIC ENERGY TO OUR MEMBERS - 7,422 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 0 1 0 1 1 1 0 0 0 0 0 0 0 0 0 0 1 1 1 0 0 0 0 1 1 0 0 0 0 0 0 0 0 1 49 0 43 1 1 1 0 0 0 0 34802644 534508 0 X 9 8 0 0 1 0 1 1 1 1 0 0 0 1 1 1 1 1 1 1 1 0 X RANDY EWELL 7752898981 1600 GREAT BASIN BLVD ELY NV 89301 X JERALD ANDERSON PRESIDENT 17.40 X X 12310 0 0 DON PHILLIPS VICE PRESIDENT 2.20 X X 8210 0 0 WILMA SANFORD SECRETARY 4.20 X X 12290 0 0 SANDRA GREEN TREASURER 5.00 X X 10845 0 0 BOB SWETICH DIRECTOR 1.50 X 8380 0 0 FRANK LEON DIRECTOR 1.40 X 9060 0 0 RICK HENDRIX DIRECTOR 2.80 X 8720 0 0 JERRY MORRILL DIRECTOR 3.80 X 9060 0 0 RON MILLER DIRECTOR 5.10 X 9910 0 0 RANDY EWELL GENERAL MANAGER 40.00 X 165593 0 46623 KEVIN ROBISON ASST GENERAL MANAGER 50.00 X 113603 0 40994 JESSE MURDOCK ENGINEERING MANAGER 40.00 X 106697 0 42311 BILL RICCI OPERATIONS MANAGER 40.00 X 107957 0 40573 JODI PINTAR LINEMAN 45.00 X 104109 0 36690 686744 0 207191 5 0 1 0 ENERGY ERECTORS 31588 PROGRESS ROAD LEESBURG FL 34748 CONTRACTOR SERVICES 1113592 SUMMIT LINE CONSTRUCTION 875 SOUTH INDUSTRIAL PARKWAY HEBER CITY UT 84032 CONTRACTOR SERVICES 1018204 ELECTRICAL CONSULTANTS INC 3521 GABEL ROAD BILLINGS MT 59102 DESIGNING AND ENGINEERING 627936 SOLOMON CORPORATION PO BOX 245 SOLOMON KS 67480 FIELD SERVICES 422824 EPC SERVICES COMPANY 3521 GABEL ROAD BILLINGS MT 59102 PROJECT MANAGEMENT 182115 7 X ELECTRICITY SALES 221000 33887413 33887413 PATRONAGE DIVIDENDS 221000 107685 96054 11631 33995098 177648 53550 124098 12953 62232 0 0 12953 62232 75185 75185 1262 -1262 -1262 -1262 63860 57244 6616 5194 1422 INTERNET SERVICE 519100 263214 263214 SECURITY SYSTEMS 561700 8160 8160 271374 34524659 33988661 337977 198021 X 9315 6767 733054 455598 1557560 156002 518948 140896 932955 1730623 PURCHASED POWER 25212911 DISTRIBUTION EXPENSE 1004740 ADMIN & GENERAL EXPENSE 755602 CUSTOMER SERVICE 456458 853230 34524659 5123662 2652312 600000 844068 729015 3395055 4005054 2619 87 68075316 32500890 31600312 35574426 4888850 4928369 163977 164953 46018543 48654216 2957135 2448553 480537 521126 12950070 15841372 2009889 1924558 18397631 20735609 X 488969 522813 0 0 27131943 27395794 27620912 27918607 46018543 48654216 X 0 297695 X X 0 1 X 0 0 0 1 X 377801 377801 4774791 2011313 2763478 58978023 30489577 28488446 3944701 3944701 35574426 PATRONAGE CAPITAL - CFC 760150 C PATRONAGE CAPITAL - COOPERATIVE RESPONSE CENTER 3688 C PATRONAGE CAPITAL - NISC 17612 C PATRONAGE CAPITAL - NRTC 84879 C PATRONAGE CAPITAL - FEDERATED 62500 C PATRONAGE CAPITAL - DESERET GENERATION & TRANSMISSION 3192063 C CAPITAL TERM CERTIFICATES - CFC 612839 C INVESTMENT IN MEMBERSHIPS 12000 C ENERGY CONSERVATION LOANS 82638 C MEMBER CAPITAL SECURITIES CFC 100000 C 4928369 CONSUMER DEPOSITS 453053 ACCRUED OTHER COMPENSATED ABSENCES 574126 OTHER CURRENT AND ACCRUED LIABILITIES 112457 DEFERRED CREDITS 784922 1924558 X 34198811 0 34198811 325848 325848 34524659 33465757 0 33465757 1058902 1058902 34524659 Part IV, Line 2b: PURSUANT TO SECTION 81.507 OF THE NEVADA PROPERTY CODE AND THE COOPERATIVE'S BYLAWS, THE COOPERATIVE CAN RETAIN ANY CAPITAL CREDIT OF A MEMBER, WHO IS RESIDENT OF NEVADA, WHICH REMAINED UNCLAIMED FOR A PERIOD OF ONE YEAR. THE COOPERATIVE HAS CHOSEN TO APPLY THESE UNCLAIMED PATRONAGE CAPITAL CREDITS TOWARDS GRANTS, SPONSORSHIPS AND DONATIONS TO NON-PROFIT AND CIVIC ORGANIZATIONS THAT ARE LOCATED IN THE COOPERATIVE'S SERVICE AREA. UTAH MEMBER-RESIDENTS' UNCLAIMED CAPITAL CREDITS ARE ALSO HELD BY THE COOPERATIVE TO (A) ASSIST LOW-INCOME PERSONS TO PAY THEIR UTILITY BILLS, AND (B) TO PROVIDE SCHOLARSHIPS TO LOCAL GRADUATING HIGH SCHOOL SENIORS. IN THE STATE OF UTAH, PURSUANT TO UTAH'S UNIFORM AGRICULTURAL COOPERATIVE ASSOCIATION ACT (TITLE 3, CHAPTER 1, SECTION 11), THE COOPERATIVE CAN RETAIN CAPITAL CREDITS GIVEN TO ITS MEMBERS THAT REMAIN UNCLAIMED FOR A PERIOD OF THREE YEARS, BUT CAN ONLY APPLY THESE UNCLAIMED CAPITAL CREDITS TO UTILITY BILL ASSISTANCE OF LOW-INCOME PERSONS AND SCHOLARSHIPS FOR HIGH-SCHOOL SENIORS. Part X, Line 2: THE COOPERATIVE HAS 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 THEIR FILING STATUS AS A TAX EXEMPT ENTITY. THE COOPERATIVE DETERMINED THAT IT IS MORE LIKELY THAN NOT THAT THEIR TAX POSITION WILL BE SUSTAINED UPON EXAMINATION BY THE INTERNAL REVENUE SERVICE, AND THAT ALL TAX BENEFITS ARE LIKELY TO BE REALIZED UPON SETTLEMENT WITH TAXING AUTHORITIES. Part XI, Line 4b - Other Adjustments: EXPENSES RECORDED IN NON-OPERATING MARGINS RECLASSED TO EXPENSES 325,848. Part XII, Line 4b - Other Adjustments: EXPENSES RECORDED IN NON-OPERATING MARGINS RECLASSED TO EXPENSES 325,848. PATRONAGE CAPITAL ASSIGNABLE 733,054. 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. CONSEQUENTLY IN ACCORDANCE WITH IRS INSTRUCTIONS SCHEDULE D, PART IX HAS BEEN LEFT BLANK. SCHEDULE D Part XII, Line 4B Part XII, PATRONAGE CAPITAL ASSIGNABLE - $733,054 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 CHRISTMAS PRESENTS FOR LOCAL CHILDREN AND FAMILILES IN NEED; 45 FAMILIES SERVED INCLUDING 103 CHILDREN. 103 6767 SCHEDULE I, PART II 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. X X X X 0 0 0 RANDY EWELL GENERAL MANAGER 140464 0 3000 0 22129 0 18720 0 27903 0 212216 0 0 0 KEVIN ROBISON ASST GENERAL MANAGER 99093 0 0 0 14510 0 13072 0 27922 0 154597 0 0 0 DESERET GENERATION & TRANSMISSION COOPERATIVE THE GENERAL MANAGER AND DIRECTOR ANDERSON SERVE ON DESERET G&T COOP'S BOARD 25140879 THE COOPERATIVE PURCHASES ELECTRIC POWER FROM DESERET GENERATION & TRANSMISSION COOPERATIVE. 0 KAYSIE EWELL KAYSIE EWELL HAS A FAMILY RELATIONSHIP WITH THE GENERAL MANAGER. 20450 KAYSIE IS AN EMPLOYEE OF THE COOPERATIVE. 0 Form 990, Part VI, Section A, line 4 ARTICLE I, SECTION 1.05.1, 1.05.7, AND SECTION 1.06.1 OF THE COOPERATIVE'S BYLAWS WERE AMENDED TO PROVIDE FOR THE INCLUSION OF A "DOMESTIC PARTNERSHIP" AS A JOINT MEMBERSHIP OF THE COOPERATIVE, WITH THE SAME PROVISIONS, RIGHTS, TERMS, CONDITIONS, OBLIGATIONS, RESPONSIBILITIES AND LIABILITIES AS A MARRIED COUPLE. A "DOMESTIC PARTNERSHIP" MEANS THE SOCIAL CONTRACT BETWEEN TWO PERSONS AS DESCRIBED IN NEVADA REVISTED STATUTE 122A.100. ARTICLE 5, SECTION 5.11 WAS AMENDED TO PROVIDE FOR THE USE OF AN APPROPRIATE INSURANCE POLICY IN THE PLACE OF BONDING, FOR THE TREASURER OR ANY OTHER OFFICER, AGENT OR EMPLOYEE OF THE COOPERATIVE CHARGED WITH RESPONSIBILITY OF THE COOPERATIVE'S FUNDS OR PROPERTY. ARTICLE 8, SECTION 8.17 WAS AMENDED TO DEFINE THE GOVERNING DOCUMENTS AS REFERENCED AS THE "ENTIRE AGREEMENT" BETWEEN THE COOPERATIVE AND ANY MEMBER. THE GOVERNING DOCUMENTS ARE TO INCLUDE THE ARTICLES OF INCORPORATION AND ALL AMENDMENTS THERETO, ALL RATE SCHEDULES ADOPTED BY THE COOPERATIVE AS THE SAME MAY BE AMENDED FROM TIME TO TIME, ALL RULES AND REGULATIONS ADOPTED BY THE COOPERATIVE AS THE SAME MAY BE AMENDED FROM TIME TO TIME AND ALL RULES, REGULATIONS AND ACTIONS ADOPTED, TAKEN OR APPROVED BY THE BOARD OF DIRECTORS. 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. THE DISPOSAL OF A SUBSTANTIAL PORTION OF THE COOPERATIVE'S ASSETS. Form 990, Part VI, Section A, line 8b FROM TIME TO TIME THE ENTIRE BOARD WILL GO INTO EXECUTIVE SESSION FOR DISCUSSING ITEMS OF A SENSITIVE AND CONFIDENTIAL NATURE. WHEN THIS OCCURS MANAGEMENT AND OTHERS IN ATTENDANCE ARE REMOVED FROM THE MEETING ROOM. 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. Form 990, Part VI, Section B, line 11 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. Form 990, Part VI, Section B, line 12c 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. Form 990, Part VI, Section B, line 15 THE BOARD OF DIRECTORS COMPARE COMPENSATION FROM OTHER COOPERATIVE'S FORM 990S 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 OFFICER AND KEY EMPLOYEES, IF ANY. THE SURVEY INCLUDES SALARIES FROM SIMILAR COOPERATIVES THROUGHOUT NEVADA AND THE NATION. Form 990, Part VI, Section C, line 19 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. Form 990, Part VI, Line 1b INDEPENDENT DIRECTORS JERALD ANDERSON PER IRS FORM 990 INSTRUCTIONS IS NOT AN INDEPENDENT DIRECTOR BECAUSE HE IS ON THE BOARD OF DESERET GENERATION & TRANSMISSION COOPERATIVE, A TAXABLE COOPERATIVE. THE COOPERATIVE IS A MEMBER OF DESERET G&T AND PURCHASES ITS ELECTRIC ENERGY FROM DESERET G&T. AS SUCH, MR. ANDERSON IS THE COOPERATIVE'S REPRESENTATIVE ON DESERET G&T'S BOARD. MR. ANDERSON HAS NO OWNERSHIP INTEREST IN DESERET G&T AND RECEIVES NO DIRECT OR INDIRECT BENEFIT FROM THE COOPERATIVE DOING BUSINESS WITH DESERET G&T. Form 990, Part VII, Column F TO PROVIDE DETAIL REGARDING OFFICER'S OTHER COMPENSATION 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. AS PART OF THE PLAN DOCUMENT, THE COOPERATIVE PROVIDES A MATCHING CONTRIBUTION UP TO 12% OF A PARTICIPATING EMPLOYEE'S SALARY. EMPLOYER CONTRIBUTIONS ARE AVAILABLE TO PARTICIPATING EMPLOYEES, INCLUDING OFFICERS, MEETING THE ELIGIBILITY REQUIREMENTS OF SUCH PLANS. THE COOPERATIVE ALSO PROVIDES HEALTH AND LIFE INSURANCE TO ALL EMPLOYEES, INCLUDING OFFICERS, THROUGH A QUALIFIED PLAN. THE AMOUNTS REPORTED ON PART VII, COLUMN (F) FOR THE OFFICER IS COMPRISED OF THE TOTAL AMOUNT CONTRIBUTED TO THE 401(K) PENSION PLAN AND THE INSURANCE PREMIUMS PAID FOR THE BENEFIT OF THE OFFICER. Form 990, Part VIII, Line 2 PATRONAGE DIVIDENDS 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 ACCOUNTING SYSTEM THE ACCOUNTING RECORDS OF THE COOPERATIVE ARE MAINTAINED IN ACCORDANCE WITH THE UNIFORM SYSTEM OF ACCOUNTS AS PRESCRIBED BY THE FEDERAL ENERGY REGULATORY COMMISSION FOR CLASS A AND B ELECTRIC UTILITIES MODIFIED FOR ELECTRIC BORROWERS OF THE RURAL UTILITIES SERVICE(RUS). THE UNIFORM SYSTEM OF ACCOUNTING DOES NOT RECORD EXPENSES IN THE GENERAL EXPENSE CATEGORIES PROVIDED ON PART IX LINES 1 - 23. THE COOPERATIVE WILL BREAK OUT 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 WILL BE REPORTED ON LINE 24 UNDER THE EXPENSE CATEGORIES REQUIRED BY THE UNIFORM SYSTEM OF ACCOUNTS. Form 990, Part IX, Lines 5-7 RECONCILIATION OF WAGES PER RETURN TO TOTAL WAGES ACCRUED AND/OR PAID SALARIES AND WAGES ARE ALLOCATED TO ASSET, LIABILITY, AND EXPENSE ACCOUNTS BASED ON THE ACCOUNTING SYSTEM DESCRIBED ABOVE. IN AN EFFORT TO EXPLAIN WHY THE AMOUNTS REPORTED ON LINES 5-7 DO NOT AGREE TO THE TOTAL WAGES ACCRUED AND/OR PAID THE FOLLOWING RECONCILIATION IS PROVIDED. TOTAL PER LINES 5-7 $2,013,158 LESS DIRECTORS FEES REPORTED ON 1099-MISC (88,785) LESS EMPLOYEE OFFICER BENEFITS INCLUDED IN LINE 5 (87,617) PLUS SALARIES AND WAGES ALLOCATED TO NONOPERATING MARGIN 43,723 PLUS SALARIES AND WAGES ALLOCATED TO ASSET ACCOUNTS 1,019,825 TOTAL WAGES ACCRUED AND/OR PAID $2,900,304 Form 990, Part IX, Line 24 BREAKDOWN OF EXPENSES INCLUDED IN ADMINISTRATIVE AND GENERAL THE FOLLOWING IS A BREAKDOWN OF THE EXPENSES REPORTED AS ADMINISTRATIVE AND GENERAL EXPENSE ON FORM 990, PART IX, LINE 24. OUTSIDE SERVICES EMPLOYED $222,119 INSURANCE 96,282 MAINTENANCE OF GENERAL PLANT 278,064 REGULATORY COMMISSION EXPENSE 1,037 MISCELLANEOUS GENERAL EXPENSE 158,100 TOTAL ADMINISTRATIVE AND GENERAL EXPENSE PER 990 $755,602 Form 990, Part IX, Line 24e TO PROVIDE DETAIL REGARDING OTHER EXPENSES THE FOLLOWING IS A BREAKDOWN OF THE EXPENSES REPORTED AS OTHER EXPENSES ON FORM 990, PART IX, LINE 24E INTERNET EXPENSE 180,036 TELEPHONE COMMUNICATIONS EXPENSE 58 SECURITY SYSTEM EXPENSE 6,130 SALES EXPENSE 56,233 TAX EXPENSE - OTHER 430,958 TRANSMISSION EXPENSE 179,815 TOTAL OTHER EXPENSES PER FORM 990, LINE 24E $853,230 Form 990, Part IX, Line 4 BENEFITS PAID TO MEMBERS THE FORM 990 INSTRUCTIONS SPECIFICALLY STATE THAT THE AMOUNT OF PATRONAGE DIVIDENDS PAID TO THE MEMBERS 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 MEMBERS. THE COOPERATIVE'S TAX EXEMPT PURPOSE IS TO PROVIDE ELECTRICITY TO ITS MEMBERS 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 MEMBERS. 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 MEMBERS, AND (3) IN A FAIR AND EQUITABLE BASIS 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 AND IS SUMMARIZED AS FOLLOWS: (A) IN ORDER TO INDUCE PATRONAGE AND TO ASSURE THAT THE COOPERATIVE WILL OPERATE ON A NONPROFIT BASIS, THE COOPERATIVE IS OBLIGATED TO ACCOUNT ON A PATRONAGE BASIS TO ALL ITS MEMBERS FOR ALL AMOUNTS RECEIVED AND RECEIVABLE FROM THE FURNISHING OF ELECTRIC ENERGY IN EXCESS OF OPERATING COSTS AND EXPENSES PROPERLY CHARGEABLE AGAINST SUCH SERVICES (I.E. MARGINS FROM THE PROVISION OF ELECTRIC ENERGY). (B) THE MARGINS FROM THE PROVISION OF ELECTRIC ENERGY ARE RECEIVED WITH THE UNDERSTANDING THAT THEY ARE FURNISHED BY THE MEMBERS AS CAPITAL. (C) THE COOPERATIVE IS OBLIGATED TO PAY BY CREDITS TO A CAPITAL ACCOUNT FOR EACH MEMBER FOR ALL SUCH MARGINS. AND (D) ALL SUCH AMOUNTS CREDITED TO THE CAPITAL ACCOUNT OF ANY MEMBER SHALL HAVE THE SAME STATUS AS THOUGH THEY HAD BEEN PAID TO THE MEMBER IN CASH IN PURSUANCE OF A LEGAL OBLIGATION TO DO SO AND THE MEMBER HAD THEN FURNISHED TO THE COOPERATIVE CORRESPONDING AMOUNTS OF CAPITAL. THE AMOUNT REPORTED ON PART IX, LINE 4 REPRESENTS THE AMOUNT OF PATRONAGE CAPITAL THAT IS EITHER ALLOCATED OR TO BE ALLOCATED TO THE MEMBERS RESULTING FROM THEIR PURCHASE OF ELECTRICITY FROM THE COOPERATIVE FOR THE 2013 CALENDAR YEAR. AS NOTED ABOVE, SUCH AMOUNTS ARE ALLOCATED SUBSEQUENT TO YEAR-END IN A FAIR AND EQUITABLE MANNER ON THE BASIS OF PATRONAGE (I.E. PURCHASES). THE AMOUNTS ALLOCATED ARE REPRESENTATIVE OF THE MARGINS FROM THE PROVISION OF ELECTRIC ENERGY TO THE MEMBERS AND ARE DONE PURSUANT TO THE OBLIGATION THAT EXISTED IN THE BYLAWS PRIOR TO THE COOPERATIVE PROVIDING ELECTRICITY TO ITS MEMBERS. THEREFORE, THESE AMOUNTS MEET THE DEFINITION OF THE TERM "PATRONAGE DIVIDENDS PAID". PLEASE NOTE, HOWEVER, THAT BECAUSE PATRONAGE DIVIDENDS IS THE PROCESS BY WHICH THE COOPERATIVE OPERATES AT COST WITH ITS MEMBERS AND THEREBY A KEY COMPONENT TO ACCOMPLISHING ITS EXEMPT PURPOSE, THE COOPERATIVE HAS REPORTED THE AMOUNT OF ITS 2013 MARGIN THAT HAS BEEN OR IS TO BE ALLOCATED TO THE MEMBERS SUBSEQUENT TO YEAR-END. SUCH AMOUNTS ARE AN EXPENSE FOR FORM 990 REPORTING AND IS NOT AN EXPENSE FOR FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. AS A RESULT, THE DIFFERENCE BETWEEN THE COOPERATIVE'S GAAP BASIS FINANCIAL STATEMENTS AND THE REVENUE LESS EXPENSES REPORTED ON PART I, LINE 19 IS THE AMOUNT OF PATRONAGE DIVIDENDS REPORTED AS BENEFITS PAID TO MEMBERS. Form 990, Part XI, line 9: NET CHANGE IN MEMBERSHIPS 33,844. RETIREMENT OF PATRONAGE CAPITAL -469,203. PATRONAGE CAPITAL ASSIGNABLE 733,054. Form 990, Part XII, Line 2c AUDIT COMMITTEE THE BOARD AS A WHOLE IS RESPONSIBLE FOR OVERSEEING THE FINANCIAL STATEMENT AUDIT AND SELECTING THE INDEPENDENT FINANCIAL STATEMENT AUDITOR.