TIN:
SCHEDULE O
(Form 990)
Department of the Treasury
Internal Revenue Service
(Form 990)
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
2021
Open to Public
Inspection
Inspection
Name of the organization
TANNER ELECTRIC COOPERATIVE INC
Employer identification number
91-0330490
91-0330490
| Return Reference | Explanation |
|---|---|
| FORM 990, PART I, LINE 19 - REVENUE LESS EXPENSES | 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, LINE 19 REPORTS NET INCOME OF $960,801, WHICH IS THE AMOUNT BY WHICH THE PATRONAGE DIVIDEND CALCUALTION WAS REDUCED TO COVER THE CURRENT AND PRIOR YEAR LOSSES, AND THE EFFECT OF UNREALIZED GAINS/LOSSES ON INVESTMENTS. THE FOLLOWING IS PROVIDED TO FURTHER EXPLAIN THE IMPACT OF THESE TRANSACTIONS: 2022 NET MARGIN PER FINANCIAL STATEMENTS $ 1,147,779 RECOVERY OF PRIOR YEAR UNALLOCATED LOSS (847,779) BENEFITS PAID TO MEMBERS (I.E. PATRONAGE DIVIDENDS), (300,000) PART 1, LINE 14 EQUITY METHOD LOSS FROM SUBSIDIARY $ 68,611 UNREALIZED GAINS/LOSSES ON INVESTMENTS, 44,411 PART XI, LINE 5 TOTAL ON PART I, LINE 19 $ 960,801 U.S. GAAP REQUIRES THE COOPERATIVE TO RECORD ON ITS BOOKS THE EQUITY METHOD INCOME (LOSS) FROM ITS WHOLLY OWNED SUBSIDIARY. EQUITY METHOD INCOME (LOSS) IS NOT INCOME FOR FORM 990 REPORTING PURPOSES AND HAS BEEN REPORTED AS AN OTHER CHANGE IN NET ASSETS. HOWEVER, THIS LOSS OF $68,611 IS A COMPONENT OF NET BOOK INCOME, ON WHICH THE PATROANGE DIVIDEND IS BASED. INCLUDING THIS LOSS IN THE PATRONAGE DIVIDEND CALCUALTION IS BASED ON THE FACT THAT IT IS ASSOCIATED WITH THE PROVISION OF ELECTRIC ENERGY; THE NET MARGINS OF WHICH ARE SUBJECT TO A PRE-EXISTING OBLIGATION IN THE BYLAWS TO ALLOCATE EQUITABLY TO THE MEMBERS ON A PATROANGE BASIS (I.E. PATRONAGE DIVIDEND). THIS CONNECTION IS MADE DUE TO THE INVESTMENT INTENT OF THE SUBSIDIARY - TO HELP SECURE A SOURCE OF ELECTRIC POWER TO MEET ANTICIPATED DEMANDS THAT, AT THE TIME OF THE INVESTMENT, THE CURRENT WHOLESALE POWER SUPPLIER WAS UNABLE TO MEET. THE SECOND ADJUSTMENT REPRESENTS PRIOR UNALLOCATED LOSSES DERIVED FROM THIS INVESTMENT. AS NOTED ABOVE, SINCE THE INTENT OF THE EQUITY METHOD INVESTMENT WAS TO SECURE A FUTURE POWER SUPPLY, THE NET INCOME (LOSS) FROM THE INVESTMENT IS ASSOCIATED WITH THE PROVISION OF ELECTRIC ENERGY; THE NET MARGINS OF WHICH ARE ALLOCABLE TO THE MEMBERS AS A PATRONAGE DIVIDEND. THEREFORE, PRIOR LOSSES SHOULD ALSO BE CONSIDERED IN THE PATRONAGE DIVIDEND CALCULATION. PURSUANT TO THE AUTHORITY PROVIDED IN THE BYLAWS, THE BOARD OF DIRECTORS HAS APPROVED RECOVERING THIS LOSS AS A REDUCTION IN THE PATRONAGE DIVIDEND CALCULATION PRO RATA OVER AN 8 YEAR PERIOD. |
| FORM 990, PART VI, SECTION A, LINE 4 | DURING THE YEAR, THE COOPERATIVE'S BYLAWS WERE AMENDED TO MOVE THE ACTIONS OF ARTICLE V, SECTION (C), POLICY AND BYLAWS COMMITTEE, TO ARTICLE XI, AMENDMENTS. THIS AMENDMENT DISSOLVED A SEPARATE COMMITTEE FOR BYLAW REVIEWS AND REVISIONS AND PLACED THOSE ACTIONS ON THE FULL BOARD OR AD HOC COMMITTEE, IF APPOINTED. A COMPLETE COPY OF THE BYLAWS CAN BE FOUND ON THE COOPERATIVE'S WEBSITE AT: HTTPS://WWW.TANNERELECTRIC.COOP/TEC-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 ADDITIONALLY, THE MEMBERS OF THE COOPERATIVE MAY AMEND THE BYLAWS BY PETITION OF AT LEAST 5% AND AFFIRMATIVE VOTE OF A MAJORITY OF THE MEMBERSHIP ATTENDING THE ANNUAL MEETING. BYLAW AMENDMENTS INITIATED BY MEMBER PETITION SHALL NOT BE AMENDED BY THE BOARD OF DIRECTORS EXCEPT BY APPROVAL OF A MAJORITY OF MEMBERS IN ATTENDANCE AT THE SUBSEQUENT ANNUAL MEETING. |
| 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 | DIRECTORS, EMPLOYEE OFFICERS, AND KEY EMPLOYEES, IF ANY, ARE REQUIRED TO REVIEW VENDORS, ORGANIZATIONS AND RELATIONSHIPS ANNUALLY AND DECLARE CONFLICTS OF INTEREST THAT ARE PROHIBITED BY COOPERATIVE POLICY. |
| FORM 990, PART VI, SECTION B, LINE 15 | MULTIPLE EXTERNAL INDUSTRY SOURCES ARE USED FOR WAGE COMPARISONS AND BENCHMARKING. CEO COMPENSATION IS BASED ON INDUSTRY COMPARISON AND INDEPENDENT SURVEYS, AND ARE REVIEWED AND APPROVED BY THE PERSONNEL COMMITTEE. UPON APPROVAL, THE COMMITTEE RECOMMENDS TO THE FULL BOARD IN EXECUTIVE SESSION THE CEO COMPENSATION PACKAGE. A COMPENSATION SURVEY IS UTILIZED WHEN DETERMINING AND APPROVING THE COMPENSATION OF THE COOPERATIVE'S OTHER EMPLOYEES MEETING THE DEFINITION OF OFFICER AND KEY EMPLOYEE, IF ANY. ALL SALARIES, WAGES, AND ADJUSTMENTS ARE APPROVED BY THE CEO. |
| FORM 990, PART VI, SECTION C, LINE 19 | AUDITED FINANCIAL STATEMENTS, BOARD POLICIES (INCLUDING CONFLICT OF INTEREST), AND CERTAIN OTHER ORGANIZATIONAL DOCUMENTS ARE AVAILABLE UPON REQUEST. THE COOPERATIVE ALSO HOLDS AN ANNUAL MEETING OF THE MEMBERSHIP AND PROVIDES FINANCIAL AND OTHER INFORMATION AT THE MEETING. ADDITIONALLY, THE COOPERATIVE'S BYLAWS CAN ALSO BE FOUND ON THE COOPERATIVE'S WEBSITE AT WWW.TANNERELECTRIC.COOP/TEC-BYLAWS. |
| 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 MEETING THE ELIGIBILITY REQUIREMENTS OF SUCH PLANS, INCLUDING OFFICERS, KEY EMPLOYEES AND HIGHLY COMPENSATED EMPLOYEES. 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 EMPLOYEE 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 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 COOPERATIVE IS NO LONGER A RURAL UTILITIES SERVICE (RUS) BORROWER, ITS ACCOUNTING RECORDS ARE MAINTAINED IN ACCORDANCE WITH THE UNIFORM SYSTEM OF ACCOUNTS (USOA) PRESCRIBED FOR RUS ELECTRIC BORROWERS. THE USOA GENERALLY 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 THE APPLICABLE LINE BASED ON THE FUNCTIONAL EXPENSE CATEGORIES REQUIRED BY THE USOA. |
| 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 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. |
| 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 $ 2,032,629 LESS: DIRECTOR FEES REPORTED ON FORMS 1099-NEC (44,475) LESS: EMPLOYEE OFFICER BENEFITS INCLUDED IN LINE 5 (240,540) LESS: KEY EMPLOYEE BENEFITS INCLUDED IN LINE 5 (87,759) PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 630,354 PLUS: SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 203,176 TOTAL WAGES ACCRUED AND/OR PAID $ 2,493,385 |
| FORM 990, PART IX, LINE 24: | ADMINISTRATIVE & GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL SALARIES, BENEFITS & OTHER $ 1,393,750 OFFICE SUPPLIES 333,413 OUTSIDE SERVICES 47,889 INSURANCES AND DAMAGES 84,778 ADVERTISING 13,202 MISCELLANEOUS GENERAL 62,740 DIRECTORS 66,711 TRAININGS AND MEETINGS 203,490 DUES AND SUBSCRIPTIONS 26,345 MAINTENANCE OF GENERAL PLANT 75,211 TOTAL ADMIN & GENERAL EXP PER FINANCIAL STATEMENTS $ 2,307,529 LESS: RECLASS OF DIRECTOR FEES TO PART IX, LINE 5 (44,475) LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (988,503) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (395,494) TOTAL ADMIN & GENERAL EXPENSE PER FORM 990, PART IX $ 879,057 |
| FORM 990, PART IX, LINE 24E: | OTHER EXPENSES IS COMPRISED OF THE FOLLOWING: CONSUMER ACCOUNTS $ 121,883 CUSTOMER SERVICE AND INFORMATION 30,862 TOTAL EXPENSES PER LINE 24E $ 152,745 |
| FORM 990, PART XI, LINE 9: | NET CHANGE IN MEMBERSHIPS 520. PATRONAGE CAPITAL ALLOCATED 300,000. PATRONAGE CAPITAL RETIRED - TOTAL -326,819. PATRONAGE CAPITAL RETIRED - DISCOUNT 4,085. UNCLAIMED PATRONAGE CAPITAL RETIRED - NET CHANGE 150,435. EQUITY METHOD LOSS FROM SUBSIDIARY CORPORATION -68,611. |
| FORM 990, PART XII, LINE 2C: | THE BOARD OF DIRECTORS HAVE ASSIGNED MEMBERS TO AN AUDIT COMMITTEE TO OVERSEE THE FINANCIAL STATEMENT AUDIT AND SELECT 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) 2021
Additional Data
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