TIN:
SCHEDULE O
(Form 990 or 990-EZ)
Department of the Treasury
Internal Revenue Service
(Form 990 or 990-EZ)
Department of the Treasury
Internal Revenue Service
Supplemental Information to Form 990 or 990-EZ
Complete to provide information for responses to specific questions on
Form 990 or 990-EZ or to provide any additional information.
Attach to Form 990 or 990-EZ.
Go to www.irs.gov/Form990 for the latest information.
OMB No. 1545-0047
2018
Open to Public
Inspection
Inspection
Name of the organization
WELLS RURAL ELECTRIC COMPANY
Employer identification number
88-0086059
88-0086059
| Return Reference | Explanation |
|---|---|
| FORM 990, PART VI, SECTION A, LINE 4 | DURING THE YEAR, THE BYLAWS OF THE COOPERATIVE WERE AMENDED AS FOLLOWS: ARTICLE II - MEMBERS SECTION 5, SUBSECTION 3(B) WAS AMENDED TO STATE THE PERIOD OF TIME IN WHICH THE CONSENT OF THE MEMBERS MAY BE ONTAINED SHALL BE SET BY THE BOARD, AND IT SHALL NOT EXCEED NINETY (90) CALENDAR DAYS FROM THE EFFECTIVE DATE OF THE RESOLUTIONS DESCRIBED IN SUBPARAGRAPH (A) ABOVE. ARTICLE III - BOARD OF DIRECTORS SECTION 3, SUBSECTION 1 WAS AMENDED TO STATE A REGULAR MEETING OF THE BOARD SHALL BE HELD ON THE THIRD TUESDAY OF EACH MONTH OF EACH YEAR. AS SUCH, SUBSECTION 5 WAS AMEDED TO STATE IF A SCHEDULED MEETING FALLS ON A DATE DETERMINED TO BE COMPANY BUSINESS THE MEETING WILL AUTOMATICALLY SCHEDULED FOR THE SECOND TUESDAY OF THE MONTH. A SCHEDULE FOR THE ENTIRE YEAR SHALL BE GIVEN TO EACH DIRECTOR PRIOR TO THE THIRD TUESDAY OF JANUARY. ARTICLE IV - OFFICERS SECTION 2, SUBSECTION 3 WAS AMENDED TO STATE EACH OFFICER SHALL HOLD OFFICE UNTIL THE SUBSEQUENT OCTOBER MEETING OF THE BOARD. SECTION 10 WAS AMENDED TO STATE EACH YEAR, ON OR BEFORE THE FEBRUARY BOARD MEETING, THE OFFICERS OF THE CORPORATION SHALL ISSUE A WRITTEN REPORT WHICH SETS FORTH THE CONDITION OF THE CORPORATION AT THE CLOSE OF THE PREVIOUS YEAR. ARTICLE VI - MEMBERSHIP SECTION 7, SUBSECTION 1 WAS AMENDED TO STATE MEMBERSHIP MAY BE TERMINATED FOR THE FOLLOWING, (A) FAILURE TO PAY ELECTRIC BILL PURSUANT TO CORPORATION POLICY AND PROCEDURE; (B) WRITTEN REQUEST BY THE MEMBER FOR TERMINATION OF MEMBERSHIP; (C) DEATH OF NATURAL PERSON WHO IS A MEMBER, TOGETHER WITH NOTICE OF SUCH DEATH BY A REPRESENTATIVE OF THE DECEASED; AND (D) DISSOLUTION OF LEGAL EXISTENCE OF A MEMBER NOT A NATURAL PERSON. SUBSECTIONS 2 AND 3 WERE ALSO AMENDED TO STATE THAT ANY RENEWAL OF MEMBERSHIP MUST BE PURSUANT TO A NEW MEMBERSHIP APPLICATION, AND TERMINATION OF MEMBERSHIP OF ANY MEMBER DOES NOT RELEASE THE DEBT FOR ELECTRIC SERVICE WHICH HAS BEEN PROVIDED. SECTION 11 WAS ADDED TO DETAIL PROCEDURES FOR DISPUTES/ARBITRATION AS FOLLOWS: 1. THE ARTICLES OF INCORPORATION AND THESE BY-LAWS ARE CONTRACTS BETWEEN THE CORPORATION AND A MEMBER. BY BECOMING A MEMBER, THE MEMBER ACKNOWLEDGES: (A) EVERY MEMBER IS A VITAL AND INTEGRAL PART OF THE CORPORATION; (B) THE CORPORATION'S SUCCESSFUL OPERATION DEPENDS UPON EACH MEMBER COMPLYING WITH THE ARTICLES OF INCORPORATION AND THESE BY-LAWS; AND (C) MEMBERS ARE UNITED IN AN INTERDEPENDENT RELATIONSHIP. 2. IT IS THE RESPONSIBILITY OF THE CORPORATION TO ENGAGE IN A GOOD FAITH EFFORT TO RESOLVE ANY CLAIM OR DISPUTE WHICH MAY ARISE BETWEEN THE CORPORATION AND A MEMBER ON A FAIR AND IMPARTIAL BASIS. IN THIS EFFORT, THE CORPORATION WILL GIVE CONSIDERATION TO: (A) RULES AND REGULATIONS IMPOSED BY STATE AND FEDERAL AGENCIES; (B) THE CORPORATION'S ARTICLES OF INCORPORATION, THESE BY-LAWS, POLICIES, PRACTICES, PLANS, AND PROCEDURES, WHICH ARE DESIGNED TO BENEFIT THE MEMBERSHIP AS A WHOLE; (C) INDUSTRY STANDARDS; AND, (D) THE INDIVIDUAL FACTS AND CIRCUMSTANCES REGARDING THE CLAIM OR DISPUTE. 3. ALL OTHER CLAIMS AND DISPUTES SHALL, AT THE REQUEST OF EITHER PARTY, FIRST BE SUBMITTED TO MEDIATION CONDUCTED BY AN IMPARTIAL MEDIATOR AGREED TO BY THE PARTIES. IN THE EVENT THE CLAIM OR DISPUTE IS NOT SATISFACTORILY RESOLVED AT MEDIATION, THEN SUCH SHALL, AT THE REQUEST OF EITHER PARTY, BE SUBMITTED TO BINDING ARBITRATION TO BE CONDUCTED BY THE AMERICAN ARBITRATION ASSOCIATION. UNLESS OTHERWISE AGREED TO BY THE PARTIES, ONE ARBITRATOR SHALL RESOLVE THE CLAIM OR DISPUTE. WRITTEN NOTICE OF THE INTENTION TO FILE A CLAIM OR DISPUTE MUST BE PROVIDED TO THE OTHER PARTY SIXTY (60) DAYS PRIOR TO SUBMITTING THE CLAIM OR DISPUTE FOR ARBITRATION. THE CORPORATION SHALL FURNISH ADEQUATE SPACE TO CONDUCT ARBITRATION PROCEEDINGS WITHIN ELKO COUNTY. UNLESS OTHERWISE AGREED TO BY THE PARTIES, THE PARTY SUBMITTING THE CLAIM OR DISPUTE SHALL INITIALLY FUND THE COST OF THE ARBITRATION PROCEEDING. THE LOSING PARTY IN ANY ARBITRATION PROCEEDING SHALL PAY THE PREVAILING PARTY ITS REASONABLE COSTS INCLUDING REASONABLE ATTORNEY FEES. SHOULD A CLAIM OR DISPUTE BE DISMISSED, THE PARTY DEFENDING THE CLAIM OR DISPUTE IS CONSIDERED THE PREVAILING PARTY. IN CASES WHEN THE PREVAILING PARTY IS NOT CLEARLY IDENTIFIED OR WHEN THE ARBITRATION AWARD TO THE PREVAILING PARTY IS LESS THAN THE SETTLEMENT OFFER FROM THE LOSING PARTY, THE ARBITRATOR SHALL APPORTION THE COSTS OF ARBITRATION, INCLUDING REASONABLE ATTORNEY FEES AND OTHER EXPENSES, BETWEEN THE PARTIES IN SUCH RATIO AS THE ARBITRATOR DEEMS TO BE FAIR AND EQUITABLE. 4. NO MEMBER OF THE CORPORATION SHALL PARTICIPATE IN ANY CLASS ACTION OR PUTATIVE CLASS ACTION AGAINST THE CORPORATION, EITHER AS A CLASS REPRESENTATIVE OR A MEMBER OF THE CLASS. A CURRENT COPY OF THE BYLAWS CAN BE FOUND ON THE COOPERATIVE'S WEBSITE AT THE FOLLOWING ADDRESS: HTTPS://WWW.WREC.COOP/ABOUT/BYLAWS |
| 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. 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 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. |
| FORM 990, PART VI, SECTION B, LINE 15 | THE BOARD OF DIRECTORS USE A COMPENSATION SURVEY WHEN DETERMINING THE COMPENSATION AND A PERFORMANCE EVALUATION OF THE CEO. THE SURVEY SHOWS COMPARATIVE SALARIES FOR CEO/GENERAL MANAGERS FROM COOPERATIVES LOCATED IN NEVADA AND THE NORTHWEST. THE CEO USES A COMPENSATION SURVEY WHEN DETERMINING THE COMPENSATION OF THE ORGANIZATION'S OTHER OFFICERS. THE SURVEY INCLUDES SALARIES FROM SIMILAR COOPERATIVES THROUGHOUT NEVADA AND THE NORTHWEST. |
| FORM 990, PART VI, SECTION C, LINE 19 | THE COOPERATIVE WILL PROVIDE A COMPLETE COPY OF THE AUDITED FINANCIAL STATEMENTS, CONFLICT OF INTEREST POLICY, OR GOVERNING DOCUMENTS TO ANY MEMBER WHO REQUESTS A COPY. AUDITED FINANCIAL STATEMENTS ARE ALSO PUBLISHED IN THE RURALITE MAGAZINE ANNUALLY. ADDITIONALLY, POLICIES AND BY-LAWS OF THE COOPERATIVE ARE ALSO AVAILABLE 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 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 THE 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. IN ADDITION TO THE ABOVE PENSION PLANS, THE COOPERATIVE ALSO PROVIDES POST-RETIREMENT HEALTH INSURANCE BENEFITS THROUGH AN UNFUNDED WELFARE BENEFIT PLAN. THE VALUE OF THESE BENEFITS HAS NOT BEEN ESTIMATED. |
| FORM 990, PART VIII, LINE 2: | PATRONAGE DIVIDENDS 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 COMPANY IS NO LONGER A RURAL UTILITIES SERVICE (RUS) BORROWER, ITS ACCOUNTING RECORDS ARE MAINTAINED IN ACCORDANCE WITH THE RUS UNIFORM SYSTEM OF ACCOUNTS (USOA) AS 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 $ 4,040,423 LESS: DIRECTOR FEES REPORTED ON FORMS 1099-MISC (260,978) LESS: EMPLOYEE OFFICER BENEFITS INCLUDED IN LINE 5 (346,144) PLUS: SALARIES AND WAGES ALLOCATED TO NONOPERATING MARGIN 33,960 PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 691,487 PLUS: SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING & OTHER ACCOUNTS 163,448 TOTAL WAGES ACCRUED AND/OR PAID $ 4,322,196 |
| FORM 990, PART IX, LINE 24: | ADMINISTRATIVE AND GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL $ 957,167 OFFICE SUPPLIES 121,865 OUTSIDE SERVICES EMPLOYED 219,724 INJURIES & DAMAGES 65,551 PENSION & BENEFITS 93,725 REGULATORY COMMISSION 50,386 MISCELLANEOUS GENERAL 199,744 DIRECTORS 546,605 ANNUAL & OTHER MEETINGS 96,951 DUES & MEMBERSHIPS 169,603 MAINTENANCE OF GENERAL PLANT 714,981 TOTAL ADMIN & GENERAL EXP PER FINANCIAL STATEMENTS $ 3,236,302 LESS: RECLASS OF DIRECTOR FEES TO PART IX, LINE 5 (260,978) LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (1,016,940) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (755,343) TOTAL ADMIN & GENERAL EXPENSE PER FORM 990, PART IX $ 1,203,041 |
| FORM 990, PART IX, LINE 24E: | OTHER EXPENSES ARE COMPRISED OF THE FOLLOWING: TRANSMISSION $ 95,329 ELECTRICAL WIRING & INSTALLATION EXPENSE 133,042 TAXES 5,166 OTHER DEDUCTIONS 21,296 TOTAL OTHER EXPENSES PER FORM 990 LINE 24E $ 254,833 |
| 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 2018 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 XI, LINE 9: | PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 801,811. PATRONAGE CAPITAL RETIRED - TOTAL -309,942. NET CHANGE IN OTHER EQUITIES -21,601. UNCLAIMED CAPITAL CREDITS RETAINED UNDER STATE LAW 79,395. ACTUARIAL GAIN ON POST-RETIREMENT BENEFITS 10,981. |
| 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. |
For Paperwork Reduction Act Notice, see the Instructions for Form 990 or 990-EZ.
Cat. No. 51056K
Schedule O (Form 990 or 990-EZ) 2018
Additional Data
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