Section 1: Interest or Dividends on Capital Prohibited
The Cooperative shall at all times be operated on a cooperative non-profit basis for the mutual benefit of its patrons. No interest or dividends shall be paid or payable by the Cooperative on any capital furnished by its patrons.
Section 2: 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 12 Cooperative. In order to induce patronage and to assure that the Cooperative will operate on a non-profit basis, the Cooperative is obligated to account to all its patrons for all amounts received and receivable from the furnishing of electric energy in excess of operative 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. 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 calendar year, the amount of capital, if any, so furnished by each patron is clearly reflected and credited in an appropriate record to the capital account of each patron. All such amounts credited to the 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.
All other amounts received by the Cooperative from its operations in excess of costs and expenses shall, insofar as permitted by law, be (a) used to offset any losses incurred during the current or any prior fiscal year and (b) to the extent not needed for that purpose, allocated to its patrons and any amount so allocated shall be included as part of the capital credited to the accounts of patrons, as herein provided.
Allocations to patrons under this section shall be made annually by the board as provided by board policy, giving consideration to kWh usage, cost of service to various classes of patrons, and other relevant factors.
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. If, at any time prior to dissolution or liquidation, the board shall determine that the financial condition of the Cooperative will not be impaired thereby, the capital then credited to patrons’ accounts may be retired in full or in part.
Capital credited to the account of each patron shall be assignable only on the books of the Cooperative pursuant to written instruction from the assignor and only to successors in interest or successors in occupancy in all or a part of such patrons’ premises served by the Cooperative unless the board, acting under policies of general application, shall determine otherwise.
Notwithstanding any other provision of these bylaws, the board at its discretion, shall have the power at any time upon the death of any patron, if the legal representatives of the estate shall request in writing that the capital credited to such patron be retired prior to the time such capital would otherwise be retired under the provisions of these bylaws, to retire capital credited to any such patron immediately upon such terms and conditions as the board, acting under policies of general application, and the legal representatives of such patron’s estate shall agree upon; provided, however, that the financial condition of the Cooperative will not be impaired thereby. Any patronage not yet allocated to the patron will be forfeited to the Cooperative as permanent equity.
The patrons of the Cooperative, by dealing with the Cooperative, acknowledge that the terms and provisions of the articles of incorporation and bylaws shall constitute and be a contract between the Cooperative and each patron, and both the Cooperative and the patrons are bound by such contract, as fully as though each patron had individually signed a separate instrument containing such terms and provisions.
Section 3: Patronage Refunds in Connection With Furnishing Other Services
In the event that the Cooperative should engage in the business of furnishing goods or services other than electric energy, all amounts shall be added to the Cooperative’s capital account as capital contributions as part of its 15% provision as a 501(c)12 organization.
Section 4: Unclaimed Patronage Refunds
In the event a patronage refund (a/k/a capital credit payment) is not negotiated within 5 years of the date the patronage refund is approved by the Board of Directors, then that un-negotiated patronage refund payment shall be forfeited to the Cooperative to be added to its capital account as a capital contribution. It shall be the duty of the Cooperative patron or his/her/its heirs or successors to keep the Cooperative informed as to his/her/its current address for receipt of patronage refunds. This provision shall be applied both prospectively and retroactively to un-negotiated patronage refunds.