2023-11-22T10:12:25-06:00 2022-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2022-01-01 860079733 GRAHAM COUNTY ELECTRIC COOPERATIVE INC GRAH 9784852451 PO DRAWER B PIMA AZ 85543 THAN ASHBY CFO 9784852451 2023-11-21 1 THAN ASHBY 999009999 0 WILLIAM M MILLER P00439459 8067473806 2023-11-21 X 2 AAL1 IAL1 2022 2023-04-26 12:10:37Z PHILLIP COOK PO DRAWER B PIMA AZ 85543 20985577 0 X WWW.GCE.COOP X 1945 AZ TO PROVIDE QUALITY AND RELIABLE ELECTRIC AND WATER SERVICES TO MEMBERS OF THE COOPERATIVE. 9 8 47 0 0 0 0 0 13913862 20682609 126824 33595 1217608 269373 15258294 20985577 0 0 2212096 349926 2809772 4016937 0 0 0 10056886 17097972 15078754 21464835 179540 -479258 54360204 63207790 25621658 34239491 28738546 28968299 X WE ARE COMMITTED TO PROVIDE SAFE, RELIABLE, AND EFFICIENT RESOURCES TO ENHANCE THE LIVES OF OUR MEMBERS AND THE COMMUNITIES WE SERVE. 1 0 ELECTRIC DIVISION:PROVIDING ELECTRIC ENERGY TO OUR MEMBERS ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. THERE WERE 8,230 ACTIVE SERVICES, 954 MILES OF ELECTRIC DISTRIBUTION LINES AND 85 MILES OF TRANSMISSION LINES AT YEAR END. WATER DIVISION:THE COOPERATIVE OWNS AND MAINTAINS WATER WELLS, STORAGE TANKS AND A WATER DISTRIBUTION SYSTEM TO SUPPLY ITS MEMBERS WITH POTABLE WATER. SUCH WATER DISTRIBUTION SERVICES ARE PROVIDED ON A PATRONAGE BASIS. PATRONAGE CAPITAL IS ALLOCABLE TO THE MEMBERS WHEN CUMULATIVE NET MARGINS EXCEED CUMULATIVE LOSSES. AT YEAR END, THERE WERE 2,031 WATER METERS SERVED BY 109 MILES OF MAIN LINES AND SERVICE LINES. 0 0 0 0 0 0 0 0 0 1 0 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 1 0 0 0 0 0 0 1 1 0 0 1 90 0 1 47 1 0 0 0 0 0 18844619 1817693 0 0 0 X 9 8 1 0 0 0 1 1 1 1 0 0 0 0 1 1 1 0 0 1 1 0 X THAN ASHBY CFO 9784852451 PO DRAWER B PIMA AZ 85543 X REUBEN MCBRIDE PRESIDENT 10.00 1.00 X X 8993 0 0 MARK CLARIDGE VICE PRESIDENT 2.80 X X 9418 0 0 JIM BRYCE SECRETARY 2.50 X X 12389 0 0 DENNIS JACOB DIRECTOR 1.00 1.00 X 5626 0 0 CHRISTOPHER CLARIDGE DIRECTOR 2.00 1.00 X 10420 0 0 TOMMY CLONTS DIRECTOR 4.80 X 11020 0 0 GENE ROBERT LARSON DIRECTOR 3.00 X 8216 0 0 STEPHEN HOOPER DIRECTOR 2.70 X 9437 0 0 GERALD SCHMIDT DIRECTOR 1.30 X 5986 0 0 PHILLIP COOK CEO 48.00 X 188077 0 42899 THAN ASHBY CFO 46.00 X 118012 0 76085 RUSTY SHERMAN OPERATIONS MANAGER 45.00 X 127987 0 64724 RANDY HAWKINS MTR SUPERVISION/PURCHASING 42.00 X 125479 0 39080 FRANCISCO MACARIO LINEMAN JOURNEYMAN 51.00 X 121062 0 66980 VICTOR TRUJILLO FOREMAN 48.00 X 120948 0 54927 PRESTON SEALE LINEMAN JOURNEYMAN 47.00 X 114297 0 62370 997367 0 407065 16 0 1 0 POWER ENGINEERS PO BOX 855321 MINNEAPOLIS MN 55485 ELECTRIC SYSTEM ENGINEERING 263785 BOWMAN CONSULTING 305 4TH STREET SAFFORD AZ 85546 WATER SYSTEM ENGINEERING 230504 2 X SALES OF ELECTRICITY 221000 16897629 16897629 TRANSMISSION & WHEELING SERVICES 221000 1278219 1278219 SALES OF WATER 221000 1063238 1063238 SERVICE FEES 221000 881867 881867 PATRONAGE DIVIDENDS 221000 561656 561656 20682609 21613 21613 8182 0 8182 8182 8182 11982 0 11982 11982 11982 POLE ATTACHMENT INCOME 221000 261191 261191 261191 20985577 20694591 0 290986 X 349926 507033 2298073 588982 448064 174785 1149564 1886155 PURCHASED POWER 11148422 DISTRIBUTION EXPENSE 1339326 ADMINISTRATIVE AND GENE 1163477 CONSUMER EXPENSE 275984 135044 21464835 40694 0 5442713 2747773 626203 347222 1152024 1662418 562385 625345 70957820 32197143 28763171 38760677 13906670 14558766 3866344 4505589 54360204 63207790 2748522 2708400 16318121 25169437 6555015 6361654 25621658 34239491 X 28490 29040 6457 6457 28703599 28932802 28738546 28968299 54360204 63207790 X -479258 709011 X X 0 0 0 351000 351000 4111843 2224927 1886916 65021167 29970770 35050397 1473810 1446 1472364 38760677 PATRONAGE CAPITAL - ARIZONA G&T COOPERATIVE 12584848 C PATRONAGE CAPITAL - CFC 1017837 C PATRONAGE CAPITAL - WUE 33927 C PATRONAGE CAPITAL - FEDERANCE COOPERATIVE 186693 C PATRONAGE CAPITAL - ERMC 2272 C CAPITAL TERM CERTIFICATES 664914 C MEMBERSHIP FEES 1105 C OTHER PROGRAM INVESTMENTS 67170 C 14558766 A/R UNBILLED REVENUE 332714 REGULATORY ASSET - SUN WATTS SOLAR PROGRAM 2829800 REGULATORY ASSET - POST RETIREMENT 1261135 REGULATORY ASSET - OTHER 81940 4505589 CONSUMER DEPOSITS 454578 ACCUMULATED PROVISION - POST RETIREMENT BENEFITS 1821455 ENERGY EFFICIENCY, RENEWABLE ENERGY TARIFF 3834003 ACCRUED OPERATING TAXES 251618 6361654 X X 0 0 0 PHILLIP COOK CEO 160805 0 16000 0 11272 0 42899 0 0 0 230976 0 0 0 THAN ASHBY CFO 110958 0 2078 0 4976 0 46598 0 29487 0 194097 0 0 0 RUSTY SHERMAN OPERATIONS MANAGER 115674 0 6702 0 5611 0 61475 0 3249 0 192711 0 0 0 FRANCISCO MACARIO LINEMAN JOURNEYMAN 120122 0 67 0 873 0 37282 0 29698 0 188042 0 0 0 PRESTON SEALE LINEMAN JOURNEYMAN 113207 0 202 0 888 0 39579 0 22791 0 176667 0 0 0 VICTOR TRUJILLO FOREMAN 116863 0 135 0 3950 0 27872 0 27055 0 175875 0 0 0 RANDY HAWKINS MTR SUPERVISION/PURCHASING 65824 0 9302 0 50353 0 38031 0 1049 0 164559 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. PHILLIP COOK: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 38,075 EMPLOYER CONTRIBUTION TO 401(K) PLAN 4,824 TOTAL REPORTED IN COLUMN C $ 42,899 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (38,075) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 35,323 EXPENSE TO THE COOPERATIVE $ 40,147 RUSTY SHERMAN: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 57,796 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,679 TOTAL REPORTED IN COLUMN C $ 61,475 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (57,796) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 40,136 EXPENSE TO THE COOPERATIVE $ 43,815 THAN ASHBY: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 42,851 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,747 TOTAL REPORTED IN COLUMN C $ 46,598 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (42,851) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 40,136 EXPENSE TO THE COOPERATIVE $ 43,883 FRANCISCO MACARIO: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 34,556 EMPLOYER CONTRIBUTION TO 401(K) PLAN 2,726 TOTAL REPORTED IN COLUMN C $ 37,282 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (34,556) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 31,536 EXPENSE TO THE COOPERATIVE $ 34,262 RANDY HAWKINS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 34,527 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,504 TOTAL REPORTED IN COLUMN C $ 38,031 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (34,527) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 0 EXPENSE TO THE COOPERATIVE $ 3,504 PRESTON SEALE: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 36,860 EMPLOYER CONTRIBUTION TO 401(K) PLAN 2,719 TOTAL REPORTED IN COLUMN C $ 39,579 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (36,860) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 31,536 EXPENSE TO THE COOPERATIVE $ 34,255 VICTOR TRUJILLO: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 24,867 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,005 TOTAL REPORTED IN COLUMN C $ 27,872 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (24,867) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 31,536 EXPENSE TO THE COOPERATIVE $ 34,541 JOSHUA BRYCE FAMILY RELATIONSHIP (TRUSTEE J. BRYCE) 95126 EMPLOYMENT 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 $479,258, WHICH IS THE EFFECT OF NON-OPERATING MARGINS RETAINED AND AN UNALLOCATED WATER DIVISION LOSS. THE FOLLOWING SCHEDULE IS PROVIDED TO FURTHER EXPLAIN THE IMPACT OF THIS TRANSACTION: ADD: WATER DIVISION LOSS $ (409,833) ADD: NON-OPERATING LOSS (69,112) ADD: OTHER ADJUSTMENTS (313) (A) - NET INCOME (LOSS) ON PAGE 1, PART I, LINE 19 $ (479,258) (B) - BENEFITS PAID TO MEMBERS (I.E. PATRONAGE DIVIDENDS), PART I, LINE 14 $ 349,926 TOTAL 2022 NET LOSS PER FINANCIAL STATEMENTS (A + B) $ (129,332) FORM 990, PART III, LINE 2 DURING 2022 AND SUBJECT FIRST TO APPROVAL OF THE MEMBERS AND THEN THE APPROVAL BY THE ARIZONA CORPORATION COMMISSION, GRAHAM COUNTY UTILITIES, INC., A WATER DISTRIBUTION UTILITY COOPERATIVE, MERGED INTO THE COOPERATIVE. THE MERGER RESULTED IN A NEW WATER DIVISION. PURSUANT TO THE BYLAWS FOR THE COOPERATIVE,SERVICES OF THE NEW WATER DIVISION ARE PROVIDED ON A PATRONAGE BASIS. THEREFORE, THE COOPERATIVE'S TAX EXEMPT PURPOSE IS EXPANDED TO INCLUDE BOTH THE PROVISION OF ELECTRIC ENERGY AND THE PROVISION OF WATER DISTRIBUTION SERVICES ON A COOPERATIVE BASIS. FORM 990, PART VI, SECTION A, LINE 2 A BUSINESS RELATIONSHIP EXISTS BETWEEN DIRECTORS GENE ROBERT LARSON AND REUBEN MCBRIDE AT ARIZONA ELECTRIC POWER COOPERATIVE. 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 TRUSTEES. 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 AND PAID PREPARER REVIEW DRAFTS OF FORM 990 PRIOR TO E-FILING. FORM 990, PART VI, SECTION B, LINE 12C GCEC HAS A CONFLICT OF INTEREST POLICY THAT IS APPLICABLE TO ALL BOARD MEMBERS. DIRECTORS ARE TO MAKE WRITTEN DISCLOSURES OF ANY SUBSTANTIAL OUTSIDE INTEREST IN ANY ENTITY DOING BUSINESS WITH GCEC, INCLUDING BUT NOT LIMITED TO ANY OWNERSHIP INTEREST OR VOTING PRIVILEGE AS A DIRECTOR OR TRUSTEE, IN ORDER TO PERMIT CONSIDERATION BY THE BOARD OF DIRECTORS OF SUCH CONTINUING RELATIONSHIP. SUCH DISCLOSURE SHALL BE MADE AT THE TIME A DIRECTOR ACQUIRES SUCH AN INTEREST. ADDITIONALLY, ALL DIRECTORS SHALL ANNUALLY MAKE A WRITTEN DISCLOSURE OF ANY TO GCEC. GCEC'S GENERAL COUNSEL SHALL ANNUALLY REVIEW WITH THE BOARD OF DIRECTORS THIS POLICY AND MATTERS RELATING TO THEIR COLLECTIVE AND INDIVIDUAL DUTIES AND OBLIGATIONS AS DIRECTORS. SUCH REVIEW SHALL TAKE PLACE DURING THE QUARTER AFTER GCEC'S ANNUAL MEETING. IMPLEMENTATION OF THE POLICY SHALL BE THE RESPONSIBILITY OF THE BOARD OF DIRECTORS, EXCEPT AS OTHERWISE PROVIDED HEREIN BY THE GENERAL MANAGER OR THE GCEC GENERAL COUNSEL. FORM 990, PART VI, SECTION B, LINE 15 THE BOARD OF TRUSTEES EVALUATES THE PERFORMANCE OF THE CEO/GENERAL MANAGER AND THEN VOTES ON THE ANNUAL SALARY. THE DECISION IS PARTIALLY BASED ON A COMPENSATION SURVEY, WHICH INCLUDES SALARIES FROM SIMILAR COOPERATIVES THROUGHOUT ARIZONA AND THE NATION. CEO/GENERAL MANAGER EVALUATES THE PERFORMANCE OF THE ORGANIZATION'S OTHER EMPLOYEES MEETING THE DEFINITION OF OFFICER AND KEY EMPLOYEES, IF ANY. A COMPENSATION SURVEY, WHICH INCLUDES SALARIES FROM SIMILAR COOPERATIVES THROUGHOUT ARIZONA AND THE NATION, IS THEN USED TO SET COMPENSATION. FORM 990, PART VI, SECTION C, LINE 19 THE COOPERATIVE WILL PROVIDE A COMPLETE COPY OF ITS GOVERNING DOCUMENTS, CONFLICT OF INTEREST POLICY, AND AUDITED FINANCIAL STATEMENTS TO ANY MEMBER WHO REQUESTS A COPY OF ANY SUCH DOCUMENT. ANNUALLY, THE COOPERATIVE PROVIDES A COPY OF THE AUDITED BALANCE SHEET AND INCOME STATEMENT TO THE MEMBERS OF THE COOPERATIVE WITH THE ANNUAL REPORT. THE ANNUAL REPORT, AUDITED FINANCIAL STATEMENTS AND BYLAWS CAN ALSO BE FOUND ON 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 GROUP TERM LIFE INSURANCE TO ALL EMPLOYEES, INCLUDING OFFICERS, THROUGH A QUALIFIED PLAN. THE AMOUNTS REPORTED ON PART VII, COLUMN (F) FOR THE OFFICERS AND HIGHLY COMPENSATED EMPLOYEES IS COMPRISED OF THE ACTUARIAL INCREASE IN THE DEFINED BENEFIT PLAN, THE TOTAL AMOUNT CONTRIBUTED TO THE 401(K) PENSION PLAN AND EMPLOYER PAID INSURANCE PREMIUMS. 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 TO 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, 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 $ 2,805,106 LESS: TRUSTEE FEES REPORTED ON FORMS 1099-NEC (81,505) LESS: EMPLOYEE OFFICER BENEFITS REPORTED ON LINE 5 (118,984) PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 873,046 PLUS: SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 756,987 TOTAL WAGES ACCRUED AND/OR PAID $ 4,234,650 FORM 990, PART IX, LINE 24: ADMINISTRATIVE AND GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL SALARIES, BENEFITS, & OTHER $ 829,404 OFFICE SUPPLIES 543,474 OUTSIDE SERVICES EMPLOYED 106,298 PROPERTY INSURANCE 14,207 INJURIES & DAMAGES 84,418 EDUCATION & TRAINING 412,458 DIRECTORS 113,507 REGULATORY COMMISSION EXPENSE 28,218 MISCELLANEOUS GENERAL 189,122 RENTS 18,211 MAINTENANCE OF GENERAL PLANT 168,322 TOTAL ADMIN & GENERAL EXP PER FINANCIAL STATEMENTS $ 2,507,639 LESS: RECLASS OF TRUSTEE FEES TO PART IX, LINE 5 (81,505) LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (835,674) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (426,983) TOTAL ADMIN & GENERAL EXPENSE PER FORM 990, PART IX $ 1,163,477 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 AND WATER DISTRIBUTION SERVICES ON A DIVISIONAL BASIS TO ITS PATRONS AND TO DO SO ON A COOPERATIVE BASIS FOR EACH DIVISION. 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 2022 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 WATER DIVISION INCURRED A LOSS FOR 2022. PURSUANT TO COOPERATIVE TAX LAW AND THE OPERATION AT COST PRINCIPLE, THIS LOSS HAS BEEN CARRIED FORWARD FOR OFFSETTING FUTURE PATRONAGE SOURCED MARGINS FROM THE WATER DIVISION BEFORE PATRONAGE CAPITAL IS ALLOCATED TO THE PATRONS OF THE WATER DIVISION. FORM 990, PART IX: ALTHOUGH NO LONGER A BORROWER OF THE RURAL UTILITIES SERVICE (RUS), THE ACCOUNTING RECORDS OF THE COOPERATIVE ARE MAINTAINED IN ACCORDANCE WITH THE UNIFORM SYSTEM OF ACCOUNTS (USOA) AS PRESCRIBED FOR RUS 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 ITS 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 XI, LINE 9: PATRONAGE CAPITAL ASSIGNABLE 349,926. PATRONAGE CAPITAL RETIRED - TOTAL -464,462. NET CHANGE IN MEMBERSHIPS -3,330. DONATED CAPITAL & OTHER 2,215. OTHER COMPREHENSIVE INCOME 781,835. CONSOLIDATION WITH GRAHAM COUNTY UTILITIES, INC. 42,827. FORM 990, PART XII, LINE 2C: AUDITED FINANCIAL STATEMENTS WERE PREPARED BY AN INDEPENDENT ACCOUNTANT FOR THE COOPERATIVE'S FINANCIAL STATEMENT AUDIT YEAR-END OF SEPTEMBER 30TH. THE TAX RETURN HAS BEEN AND CONTINUES TO BE PREPARED BASED ON A CALENDAR TAX YEAR-END OF DECEMBER 31. THE BOARD AS A WHOLE IS RESPONSIBLE FOR OVERSEEING THE FINANCIAL STATEMENT AUDIT AND SELECTING THE INDEPENDENT FINANCIAL STATEMENT AUDITOR. GRAHAM COUNTY ELECTRIC COOPERATIVE FOUNDATION INC PO DRAWER B PIMA AZ 85543 821452723 COMMUNITY ASSISTANCE & SCHOLARSHIPS AZ 501(C)(3) LINE 10 GRAHAM COUNTY ELECTRIC COOPERATIVE INC 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 GRAHAM COUNTY ELECTRIC COOPERATIVE FOUNDATION INC P N/A - LESS THAN $50,000