2025-11-17T23:28:29-06:00 2024-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2024-01-01 730274135 HARMON ELECTRIC ASSOCIATION INC HARM 5806883342 114 N FIRST HOLLIS OK 73550 AARON PAXTON GENERAL MANAGER 5806883342 2025-11-15 1 0 WILLIAM M MILLER P00439459 8067473806 2025-11-15 X 2024 2025-03-06 01:10:19Z AARON PAXTON 114 N FIRST HOLLIS OK 73550 12388571 0 X WWW.HARMONELECTRIC.COM X 1938 OK TO PROVIDE QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS OF THE COOPERATIVE. 7 7 27 0 182767 0 0 0 11903498 12184206 67236 18510 163870 180858 12134604 12383574 15842 14365 979235 716816 1872582 1995160 0 0 0 9262475 9635894 12130134 12362235 4470 21339 39406521 39862441 29224516 28942419 10182005 10920022 NONE 0 0 PROVIDING ELECTRIC ENERGY TO OUR MEMBERS ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. THERE WERE 3,668 ACTIVE SERVICES AT YEAR END. 0 0 0 0 0 0 0 0 0 1 0 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 0 0 0 1 20 0 27 1 1 1 0 0 0 0 11940700 217298 0 0 0 X 7 7 0 0 0 0 1 1 1 1 0 0 0 1 0 0 0 1 0 0 OK X AARON PAXTON GENERAL MANAGER 5806883342 114 N FIRST HOLLIS OK 73550 X BURK BULLINGTON PRESIDENT 0.50 X X 3100 0 0 LEE SPARKMAN VICE PRESIDENT 0.75 X X 2700 0 0 JAMES REEVES SECRETARY/TREASURER 2.75 X X 9300 0 0 JEAN PENCE TRUSTEE 2.00 X 5500 0 0 JAMES CONLEY ASST. SECRETARY/TREASURER 2.50 X X 6800 0 0 BRADEN CUNNINGHAM TRUSTEE 0.50 X 2100 0 0 KATHLEEN FAUGHN TRUSTEE (JAN-AUG) 2.50 X 6800 0 0 AARON PAXTON GENERAL MANAGER 50.00 X 201310 0 58078 LISA A RICHARD MANAGER ADMIN & FINANCE 50.00 X 127752 0 99769 MONTY WORTHEN OPERATIONS DIRECTOR 45.00 X 141984 0 80877 TOMMY CASWELL FOREMAN 50.00 X 131443 0 97701 ALEXANDER VELASQUEZ CONSTRUCTION FOREMAN 46.00 X 123486 0 48786 DOUGLAS BYNUM PURCHASE MANAGER 40.00 X 112355 0 71749 874630 0 456960 9 0 1 0 R&R POWERLINE INC PO BOX 246 SAYRE OK 73662 CONSTRUCTION 348828 1 X SALES OF ELECTRICITY 221000 11787685 11787685 PATRONAGE DIVIDENDS 221000 326208 326208 SERVICE FEES 221000 66213 66213 POLE ATTACHMENT INCOME 221000 4100 4100 12184206 18510 18510 4100 0 4100 4100 4100 3088 4997 -1909 -1909 HESTER WATER DIVISION 221000 141045 141045 WATER MANAGEMENT CONTRACT 561000 37622 37622 178667 12383574 12178197 182767 22610 X 14365 716816 295688 1083098 284957 236976 94441 1108452 1548584 PURCHASED POWER 5438317 DISTRIBUTION EXPENSE 611151 ADMIN & GENERAL EXPENSE 421780 OTHER DEDUCTIONS 197785 309825 12362235 337715 566334 52318 52458 507199 670769 14309 7096 667784 462400 5092418 4871324 44639829 16765529 27679506 27874300 4592095 4873245 463177 484515 39406521 39862441 668416 524665 25716052 26554319 2840048 1863435 29224516 28942419 X 7870 7735 0 0 10174135 10912287 10182005 10920022 39406521 39862441 X 21339 716678 X X 0 1 X 0 0 45938 45938 570330 447943 122387 43967909 16317586 27650323 55652 55652 27874300 PATRONAGE CAPITAL-WFEC 3768122 C PATRONAGE CAPITAL-CFC 298355 C PATRONAGE CAPITAL-TEC 321107 C PATRONAGE CAPITAL-NISC 51425 C PATRONAGE CAPITAL-FEDERATED 126015 C PATRONAGE CAPITAL-PIONEER 21033 C CAPITAL TERM CERTIFICATES-CFC 236911 C OTHER INVESTMENTS IN ASSOC. ORGANIZATIONS 50277 C 4873245 CONSUMER DEPOSITS 217675 ACCRUED TAXES 13584 EQUITY RIDER 1115376 POWER COST RECOVERY FACTOR 110117 DEFERRED CREDITS 406683 1863435 X 12186240 0 12186240 197334 197334 12383574 11448085 0 11448085 914150 914150 12362235 PART X, LINE 2: ON JANUARY 1, 2009, THE ASSOCIATION ADOPTED THE "UNCERTAIN TAX POSITIONS" PROVISIONS OF ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA. THE PRIMARY TAX POSITION OF THE ASSOCIATION IS ITS FILING STATUS AS A TAX EXEMPT ENTITY. THE ASSOCIATION DETERMINED THAT IT IS MORE LIKELY THAN NOT THAT THEIR TAX POSITIONS 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 XI, LINE 4B - OTHER ADJUSTMENTS: EXPENSES RECLASSIFIED FROM NON-OPERATING MARGINS 197,334. PART XII, LINE 4B - OTHER ADJUSTMENTS: EXPENSES RECLASSIFIED FROM NON-OPERATING MARGINS 197,334. PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 716,816. 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. PART XII, LINE 4B: FOR THE AUDITED FINANCIAL STATEMENTS, THE AMOUNT OF PATRONAGE DIVIDENDS ALLOCATED OR TO BE 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". X X 0 0 0 AARON PAXTON GENERAL MANAGER 195822 0 500 0 4988 0 29093 0 28985 0 259388 0 0 0 TOMMY CASWELL FOREMAN 129184 0 500 0 1759 0 68925 0 28776 0 229144 0 0 0 LISA A RICHARD MANAGER ADMIN & FINANCE 121774 0 500 0 5478 0 71511 0 28258 0 227521 0 0 0 MONTY WORTHEN OPERATIONS DIRECTOR 134483 0 500 0 7001 0 50157 0 30720 0 222861 0 0 0 DOUGLAS BYNUM PURCHASE MANAGER 100612 0 500 0 11243 0 42026 0 29723 0 184104 0 0 0 ALEXANDER VELASQUEZ CONSTRUCTION FOREMAN 120593 0 500 0 2393 0 20109 0 28677 0 172272 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 (NRECA RS PLAN). THE CONTRIBUTION RATE FOR PARTICIPANTS IN THE PLAN ARE THE SAME FOR ALL INDIVIDUALS IN THIS MULTI-EMPLOYER PLAN. THE CHANGE IN ACTUARIAL VALUE FOR EACH PARTICIPANT, HOWEVER, VARIES WITH AGE. 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. AARON PAXTON: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 27,135 EMPLOYER CONTRIBUTION TO 401(K) PLAN 1,958 TOTAL REPORTED IN COLUMN C $ 29,093 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (27,135) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 59,352 EXPENSE TO THE COOPERATIVE $ 61,310 TOMMY CASWELL: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 67,940 EMPLOYER CONTRIBUTION TO 401(K) PLAN 985 TOTAL REPORTED IN COLUMN C $ 68,925 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (67,940) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 29,832 EXPENSE TO THE COOPERATIVE $ 30,817 LISA A RICHARD: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 70,293 EMPLOYER CONTRIBUTION TO 401(K) PLAN 1,218 TOTAL REPORTED IN COLUMN C $ 71,511 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (70,293) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 36,900 EXPENSE TO THE COOPERATIVE $ 38,118 MONTY WORTHEN: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 48,812 EMPLOYER CONTRIBUTION TO 401(K) PLAN 1,345 TOTAL REPORTED IN COLUMN C $ 50,157 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (48,812) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 40,740 EXPENSE TO THE COOPERATIVE $ 42,085 DOUGLAS BYNUM: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 41,034 EMPLOYER CONTRIBUTION TO 401(K) PLAN 992 TOTAL REPORTED IN COLUMN C $ 42,026 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (41,034) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 30,060 EXPENSE TO THE COOPERATIVE $ 31,052 ALEXANDER VELASQUEZ: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 19,130 EMPLOYER CONTRIBUTION TO 401(K) PLAN 979 TOTAL REPORTED IN COLUMN C $ 20,109 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (19,130) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 29,676 EXPENSE TO THE COOPERATIVE $ 30,655 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 $21,339, WHICH IS THE INCOME STATEMENT EFFECT OF TRANSFER LOSSES TO OTHER EQUITIES. 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: PAGE 1, PART I, LINE 19 - TRANSFERRED TO OTHER EQUITIES $ 21,339 BENEFITS PAID TO MEMBERS (I.E. PATRONAGE DIVIDENDS), PART I, LINE 14 $ 716,816 TOTAL 2024 NET MARGIN PER FINANCIAL STATEMENTS $ 738,155 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 5. AMENDMENT TO THE BYLAWS 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 15A THE BOARD OF TRUSTEES USE 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 OKLAHOMA AND THE NATION. OTHER THAN THE GENERAL MANAGER, THE COOPERATIVE DID NOT HAVE ANY EMPLOYEES MEETING THE DEFINITION OF OFFICER OR KEY EMPLOYEE. THEREFORE, AND PURSUANT TO FORM 990 INSTRUCTIONS, LINE 15B HAS BEEN ANSWERED "NO". FORM 990, PART VI, SECTION C, LINE 19 THE COOPERATIVE PROVIDES A SUMMARIZED COPY OF THE AUDITED FINANCIAL STATEMENTS TO THE MEMBERS OF THE COOPERATIVE IN THE ANNUAL REPORT. THE COOPERATIVE WILL PROVIDE A COMPLETE COPY OF THE AUDITED FINANCIAL STATEMENTS 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, 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 VII, SECTION A: THE BOARD OF TRUSTEES CONSIDERS THE GENERAL MANAGER TO BE BOTH THE TOP MANAGEMENT OFFICIAL AND THE TOP FINANCIAL OFFICIAL. THEREFORE, ONLY THE GENERAL MANAGER IS LISTED AS AN EMPLOYEE OFFICER. 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: THE ACCOUNTING RECORDS OF THE ASSOCIATION ARE MAINTAINED IN ACCORDANCE WITH THE UNIFORM SYSTEM OF ACCOUNTS (USOA) AS PRESCRIBED BY THE FEDERAL ENERGY REGULATORY COMMISSION FOR CLASS A AND B ELECTRIC UTILITIES MODIFIED FOR ELECTRIC BORROWERS OF THE RURAL UTILITIES SERVICE. 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 $ 1,306,186 LESS: TRUSTEE FEES REPORTED ON FORMS 1099-NEC (36,300) LESS: EMPLOYEE OFFICER BENEFITS INCLUDED IN LINE 5 (58,078) PLUS: SALARIES & WAGES ALLOCATED TO NONOPERATING MARGINS 15,283 PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 434,022 PLUS: SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 179,123 TOTAL WAGES ACCRUED AND/OR PAID: $ 1,912,836 FORM 990, PART IX, LINE 24: ADMINISTRATIVE AND GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL SALARIES, BENEFITS, & OTHER $ 331,819 OFFICE SUPPLIES 65,588 OUTSIDE SERVICES EMPLOYED 46,200 OTHER INSURANCE 2,398 EMPLOYEE BENEFITS 20,934 TRUSTEES 69,058 ANNUAL MEETING 40,435 DUES TO ASSOCIATED ORGANIZATIONS 11,584 MISCELLANEOUS GENERAL 489,955 MAINTENANCE OF GENERAL PLANT 8,714 TOTAL ADMIN & GENERAL EXPENSE PER FINANCIAL STATEMENTS $ 1,086,685 LESS: RECLASS OF TRUSTEE FEES TO PART IX, LINE 5 36,300 LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (412,171) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (216,434) TOTAL ADMIN & GENERAL EXPENSE PER FORM 990, PART IX $ 494,380 FORM 990, PART IX, LINE 24E: OTHER EXPENSES IS COMPRISED OF THE FOLLOWING: CONSUMER EXPENSES $ 106,687 MANAGEMENT CONTRACT 57,436 SALES 18,277 WATER DIVISION OPERATING EXPENSES 127,425 TOTAL OTHER EXPENSES PER FORM 990 LINE 24E $ 309,825 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 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 2024 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 GAAP, HOWEVER. FORM 990, PART IX, LINE 1: ALL GRANTS, SPONSORSHIPS, AND/OR 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. EACH GRANT, SPONSORSHIP, AND/OR DONATION MADE DURING THE YEAR WAS BELOW THE REPORTING THRESHOLD OF SCHEDULE I, PART II. FORM 990, PART XI, LINE 9: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 716,816. NET CHANGE IN MEMBERSHIPS -138. 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.