801 Membership Furnished Capital -- Interest or Dividends on Capital Prohibited
The Cooperative is a not-for-profit, member-owned business, operated on a cooperative non-profit basis for the mutual benefit of its patrons. All amounts paid for electric service in excess of the cost thereof shall be furnished by members as capital and each member shall be credited with the capital so furnished as provided in Section 802 of these Bylaws. No interest or dividends shall be paid or payable by the Cooperative on any capital furnished by its patrons.
802 Patronage Capital in Connection with Furnishing Electric Energy
In the furnishing of electric energy, the Cooperative's operations shall be so conducted that all patrons will, through their patronage, furnish capital for the Cooperative. 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 patrons for all amounts received and receivable from the furnishing of electric energy in excess of operating costs and expenses properly chargeable against the furnishing of electric energy. All such amounts in excess of operating costs and expenses at the moment of receipt by the Cooperative are received with the understanding that they are furnished by the patrons as capital, subject to an exception for non-operating margins, such as interest income, other capital credits, and patronage, which shall not be allocated to capital credits but instead shall be credited to a general unallocated reserve. The Board of Directors, however, shall have the discretion to allocate nonoperating margins to the patrons if it determines such action to be in the best interests of the Cooperative.
The Cooperative is obligated to pay by credits to a capital account for each patron all such amounts in excess of operating costs and expenses. The books and records of the Cooperative shall be set up and kept in such a manner that at the end of each fiscal year the amount of capital, if any, so furnished by the patron is clearly reflected and credited in an appropriate record to the capital account of each patron, and the Cooperative shall within a reasonable time after the close of the fiscal year notify each patron of the amount of capital so credited to one's account. All such amounts credited to capital account of any patron shall have the same status as though they had been paid to the patron in cash in pursuance of a legal obligation to do so and the patron had then furnished the Cooperative corresponding amounts for capital.
The revenues of the Cooperative shall be devoted first to the payment of operating and maintenance expenses, including principal and interest on outstanding obligations, and thereafter to such reserves for improvement, new construction, depreciation, and contingencies as the Board of Directors from time to time may prescribe. Revenues not required for this purpose (excluding any reserves for unallocated margins) shall be allocated to its members on a patronage basis and included as part of the capital credited to the account of the patron, to be returned to the members from time to time either in cash, or an abatement of current charges, or by way of a rate reduction as the Board of Directors may determine.
In the event of dissolution or liquidation of the Cooperative, after all outstanding indebtedness of the Cooperative shall have been paid, outstanding capital credits shall be retired without priority on a pro rata basis before any payments are made on account of property rights of members.
Notwithstanding any other provision of these Bylaws, the Board of Directors shall have the authority to retire capital credits and determine under policies of general application the timing, method of allocation, basis, amount, priority, and order of any retirement of capital credits based on the best interests of the Cooperative and to the extent it determines the financial conditions of the Cooperative will not be impaired.
Capital credited to the account of each patron shall be assignable only on the books of the Cooperative pursuant to written instructions from the assignor and only to successors in interest or successors in occupancy in all or a part of such patron's premises served by the Cooperative, unless the Board of Directors, acting under policies of general application, shall determine otherwise.
The Cooperative, before retiring any capital credited to any patron's account, shall deduct therefrom any amount owing by such patron to the Cooperative, together with interest thereon at the legal rate. At all times while the Cooperative continues to have possession of patronage equities of its membership, the Cooperative shall have a possessory security interest and a right of set-off in the present value of such equity against any debts owed by a member to the Cooperative before making any distribution thereof to the member, assignee or heirs. Insolvency, bankruptcy, or dissolution of any individual or entity shall not be grounds for early or accelerated retirement.
(Amended Annual Meeting 07/18/14)
In becoming a patron of this Cooperative, each patron acknowledges the necessity of keeping the administrative office of the Cooperative advised of his or her current residence and mailing address so that Cooperative business, including the orderly, efficient retirement of capital credits may be accomplished without undue inconvenience and expense. Accordingly, in becoming a patron, each patron consents on his or her own behalf and on behalf of his or her heirs at law that failure to keep the Cooperative advised of residence and mailing address shall constitute an expression of said patron's desire to gift and/or forfeit all capital credits due for retirement and said capital credits may be transferred to the general account of the Cooperative.
The following events shall be evidence of such a gift/forfeiture by the patron:
- Return to the Cooperative of a properly postaged mailing addressed to the last address provided by the patron to the Cooperative administrative office, and
- Failure on the part of the patron or his or her heirs to request delivery of such capital credit retirement for a period of one year following the Cooperative attempt to deliver capital credit at an annual meeting or by mailing, whichever is later.