2022-10-28T15:00:31-05:00 2021-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2021-01-01 740828412 PEDERNALES ELECTRIC COOPERATIVE INC PEDE 8008684732 PO BOX 1 JOHNSON CITY TX 78636 RANDY KRUGER CFO 8308684984 2022-10-27 1 RANDY KRUGER 999009999 WILLIAM M MILLER P00439459 8067473806 2022-10-27 X 3 AAL1 IAL1 2021 2022-09-23 18:48:47Z JULIE PARSLEY CEO PO BOX 1 JOHNSON CITY TX 78636 831347501 0 X WWW.PEC.COOP X 1938 TX TO DELIVER LOW-COST, RELIABLE AND SAFE ELECTRIC ENERGY TO THE MEMBERS OF THE COOPERATIVE. 7 7 936 0 0 0 0 0 640791085 825694904 308861 414035 5024636 4306751 646124582 830415690 123891 0 37250365 35124360 69871159 76008557 0 0 0 542328940 721418221 649574355 832551138 -3449773 -2135448 1903877376 2029870184 1141046350 1238870016 762831026 791000168 WE ARE COMMITTED TO DELIVERING LOW-COST, RELIABLE AND SAFE ENERGY FOR OUR MEMBERS. 0 0 PROVIDING ELECTRIC ENERGY TO OUR MEMBERS ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. THERE WERE 367,147 ACTIVE SERVICES AT YEAR END. 0 0 0 0 0 0 0 1 0 1 0 0 1 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 1 1 1 0 1 237 0 936 1 0 0 0 0 0 837827722 57161069 0 0 0 X 7 7 0 0 0 0 1 1 1 1 0 0 0 1 1 1 1 1 1 1 1 0 X X RANDY KRUGER CFO 8308684984 201 SOUTH AVENUE F JOHNSON CITY TX 78636 X EMILY PATAKI PRESIDENT 13.00 X X 37200 0 0 MILTON RISTER VICE PRESIDENT 10.00 X X 37200 0 0 MARK EKRUT SECRETARY/TREASURER 12.00 X X 36700 0 0 AMY LEA SJ AKERS DIRECTOR 15.00 X 36500 0 0 TRAVIS COX DIRECTOR 10.00 X 36200 0 0 PAUL GRAF DIRECTOR 19.00 X 36200 0 0 JAMES OAKLEY DIRECTOR 6.00 X 36200 0 0 JULIE PARSLEY CHIEF EXECUTIVE OFFICER 52.00 X 752423 0 43183 EDWARD A DAUTERIVE CHIEF OPERATIONS OFFICER 65.00 X 443694 0 55280 RANDY KRUGER CHIEF FINANCIAL OFFICER 50.00 X 433589 0 58814 DON BALLARD GENERAL COUNSEL 50.00 X 437616 0 41568 DAVID THOMPSON VP - MARKETS 50.00 X 309013 0 65189 TIMOTHY NANCE VP - MEMBER RELATIONS 50.00 X 318058 0 38557 WESLEY BURNS VP - HUMAN RESOURCES 45.00 X 305899 0 48405 STEPHEN MALDONADO VP - OPERATIONS 65.00 X 292863 0 48136 RICHARD ARELLANO JAN-MAR VP - SAFETY & SUPPORT SERVICES 50.00 X 241727 0 14517 BRIAN GEDRICH JAN-JUN VP - ENGINEERING 50.00 X 169606 0 28591 MAURICIO VIESCA JAN-SEP EVP - PUBLIC AFFAIRS 40.00 X 433594 0 43194 WAYNE MCKEE VP - SAFETY & TECHNICAL TRAINING 40.00 X 329123 0 40774 BRIDGET HEADRICK VP - COMPLIANCE & REGULATORY 45.00 X 304839 0 52680 AISHA HAGEN ASSOCIATE GENERAL COUNSEL 40.00 X 307881 0 44003 JOE LOCKHART DIRECTOR - REGIONAL OPERATIONS 40.00 X 225722 0 44224 LAWANDA PARNELL DEC 2020 FORMER CHIEF INFORMATION OFFICER 0.00 X 227691 0 0 5789538 0 667115 390 1 1 0 JAMES POWER LINE CONSTRUCTION 43 SHOOTING CLUB ROAD BOERNE TX 78006 ELECTRIC DIST LINE CONSTRUCTION 10497369 VOLT POWER LLC 2910 HWY 31 NW HARTSELLE AL 35640 CONSTRUCTION 9462484 PANNELL CONTRACTING 106 CHULA VISTA DRIVE KERRVILLE TX 78028 CONSTRUCTION 6909467 LAMAR TECHNICAL SERVICES INC 2000 WINDY TERRACE BLDG 3A CEDAR PARK TX 78613 CONSTRUCTION, ENGINEERING SERVICES 4836592 HYDE CONSTRUCTION INC 13130 NUTTY BROWN ROAD AUSTIN TX 78737 CONSTRUCTION 4061094 72 X SALES OF ELECTRICITY 221000 790444860 790444860 TRANSMISSION ACCESS 221000 17092842 17092842 CUSTOMER SERVICE FEES 221000 9741817 9741817 TRANSMISSION LEASE 221000 4783618 4783618 PATRONAGE DIVIDENDS 221000 2443736 2443736 1188031 1188031 825694904 155844 13545 142299 1190002 931811 258191 258191 258191 POLE ATTACHMENT INCOME 221000 4306751 4306751 4306751 830415690 825966640 0 4449050 X 35124360 4402928 53688276 7056073 6772031 4089249 38439075 82171010 PURCHASED POWER 518792868 DISTRIBUTION EXPENSE 49308446 CONSUMER EXPENSE 14362084 ADMIN & GENERAL EXPENSE 14147055 4197683 832551138 1458857 9038687 10000000 24984529 25416668 21235224 29608981 3880647 2007032 2181211179 354965981 1733555269 1826245198 16002062 16879801 92760788 120673817 1903877376 2029870184 72847542 84629834 154779 187911 839092266 1028876823 228951763 125175448 1141046350 1238870016 X 14287737 15184321 0 0 748543289 775815847 762831026 791000168 1903877376 2029870184 X -2135448 30304590 X X 0 1 X 1 0 0 1 X 35242252 35242252 98936898 25703101 73233797 1926290276 329254027 1597036249 120741753 8853 120732900 1826245198 ACCRUED UNBILLED REVENUE 19481723 DEFERRED DEFINED BENEFIT RETIREMENT PLAN EXPENSE 44172488 ACCRUED INTEREST/DIVIDEND RECEIVABLE 34568 FPCRF UNDER RECOVERY 56985038 120673817 ACCRUED OPERATING TAXES & FEES 11777528 ACCUMULATED PROVISION FOR PENSION AND BENEFITS 63765795 CONSUMER DEPOSITS 5401795 POST RETIREMENT MEDICAL BENEFITS DEFERRED CREDIT 39906583 UNCLAIMED PROPERTY DEFERRED CREDIT 4134212 PEC POWER OF CHANGE & COMMUNITY GRANTS LIABILITY 189535 125175448 X 830415690 0 830415690 0 830415690 797426778 0 797426778 35124360 35124360 832551138 PART IV, LINE 2B: PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE ESTABLISHED AN ECONOMIC DEVELOPMENT FUND WITH AMOUNTS DESIGNATED UNCLAIMED UNDER STATE LAW. AMOUNTS DELIVERED INTO THE ECONOMIC DEVELOPMENT FUND ARE APPROVED BY THE STATE OF TEXAS AND CAN ONLY BE USED FOR THE STIMULATION AND IMPROVEMENT OF BUSINESS AND COMMERCIAL ACTIVITY FOR ECONOMIC DEVELOPMENT IN RURAL COMMUNITIES. ANY AMOUNTS SO DELIVERED INTO THE ECONOMIC DEVELOPMENT FUND ARE STILL PAYABLE TO THE PERSON TO WHOM THE ORIGINAL PAYMENT WAS MADE BUT UNCLAIMED. ALSO PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE ESTABLISHED AN ENERGY EFFICIENCY ASSISTANCE FUND WITH AMOUNTS DESIGNATED UNCLAIMED UNDER STATE LAW. AMOUNTS DELIVERED INTO THE ENERGY EFFICIENCY ASSISTANCE FUND ARE APPROVED BY THE STATE OF TEXAS AND CAN ONLY BE USED TO ASSIST MEMBERS OF AN ELECTRIC COOPERATIVE IN REDUCING THEIR ENERGY CONSUMPTION AND ELECTRICITY BILLS. ANY AMOUNTS SO DELIVERED INTO THE ENERGY EFFICIENCY ASSISTANCE FUND ARE STILL PAYABLE TO THE PERSON TO WHOM THE ORIGINAL PAYMENT WAS MADE BUT UNCLAIMED. ALSO PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE HAS ESTABLISHED A SCHOLARSHIP FUND WITH AMOUNTS DESIGNATED UNCLAIMED UNDER STATE LAW. THE AMOUNTS DELIVERED INTO THE SCHOLARSHIP FUND ARE APPROVED BY THE STATE OF TEXAS AND CAN ONLY BE USED FOR SCHOLARSHIPS TO ENABLE STUDENTS FROM RURAL AREAS TO ATTEND COLLEGE, TECHNICAL SCHOOL, OR OTHER POST SECONDARY EDUCATION INSTITUTION AND MAY BE DELIVERED TO A SCHOLARSHIP FUND ESTABLISHED BY THE COOPERATIVE. ANY AMOUNTS SO DELIVERED INTO THE SCHOLARSHIP FUND ARE STILL PAYABLE TO THE PERSON TO WHOM THE ORIGINAL PAYMENT WAS MADE BUT UNCLAIMED. PART X, LINE 2: THE COOPERATIVE FOLLOWS THE "UNCERTAIN TAX POSITIONS" PROVISIONS OF ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA. THE PRIMARY TAX POSITION OF THE COOPERATIVE IS ITS FILING STATUS AS A TAX EXEMPT ENTITY. THE COOPERATIVE DETERMINED THAT IT IS MORE LIKELY THAN NOT THAT ITS TAX POSITIONS WILL BE SUSTAINED UPON EXAMINATION BY THE INTERNAL REVENUE SERVICE (IRS) AND THAT ALL TAX BENEFITS ARE LIKELY TO BE REALIZED UPON SETTLEMENT WITH TAXING AUTHORITIES. PART XII, LINE 4B - OTHER ADJUSTMENTS: PATRONAGE CAPITAL ALLOCATED 35,124,360. PART VIII: THE AMOUNT OF INVESTMENTS - PROGRAM RELATED ON FORM 990, PAGE 11, PART X, LINE 13 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 FOR SCHEDULE D, PART VIII HAS BEEN LEFT BLANK. PART XII, LINE 4B: FOR THE AUDITED FINANCIAL STATEMENTS, THE AMOUNT OF PATRONAGE DIVIDENDS PAID (I.E. 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 CAPITAL. 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 ALLOCATED TO THE MEMBERS IS REPORTED ON FORM 990, PART IX, LINE 4 AS "BENEFITS PAID TO MEMBERS". X X X 1 0 0 JULIE PARSLEY CHIEF EXECUTIVE OFFICER 590216 0 141885 0 20322 0 29000 0 14183 0 795606 0 0 0 EDWARD A DAUTERIVE CHIEF OPERATIONS OFFICER 346549 0 76385 0 20760 0 17400 0 37880 0 498974 0 0 0 RANDY KRUGER CHIEF FINANCIAL OFFICER 332224 0 82051 0 19314 0 29000 0 29814 0 492403 0 0 0 DON BALLARD GENERAL COUNSEL 343689 0 73873 0 20054 0 29000 0 12568 0 479184 0 0 0 MAURICIO VIESCA JAN-SEP EVP - PUBLIC AFFAIRS 200235 0 83255 0 150104 0 20749 0 22445 0 476788 0 0 0 DAVID THOMPSON VP - MARKETS 243345 0 46766 0 18902 0 25711 0 39478 0 374202 0 0 0 WAYNE MCKEE VP - SAFETY & TECHNICAL TRAINING 257458 0 47648 0 24017 0 14628 0 26146 0 369897 0 0 0 BRIDGET HEADRICK VP - COMPLIANCE & REGULATORY 248751 0 36653 0 19435 0 17876 0 34804 0 357519 0 0 0 TIMOTHY NANCE VP - MEMBER RELATIONS 250741 0 45515 0 21802 0 15427 0 23130 0 356615 0 0 0 WESLEY BURNS VP - HUMAN RESOURCES 250624 0 35940 0 19335 0 16815 0 31590 0 354304 0 0 0 AISHA HAGEN ASSOCIATE GENERAL COUNSEL 252566 0 35941 0 19374 0 22704 0 21299 0 351884 0 0 0 STEPHEN MALDONADO VP - OPERATIONS 236641 0 46576 0 9646 0 14877 0 33259 0 340999 0 0 0 JOE LOCKHART DIRECTOR - REGIONAL OPERATIONS 185648 0 22744 0 17330 0 19297 0 24927 0 269946 0 0 0 RICHARD ARELLANO JAN-MAR VP - SAFETY & SUPPORT SERVICES 55786 0 51704 0 134237 0 9921 0 4596 0 256244 0 0 0 LAWANDA PARNELL DEC 2020 FORMER CHIEF INFORMATION OFFICER 0 0 0 0 227691 0 0 0 0 0 227691 0 0 0 BRIAN GEDRICH JAN-JUN VP - ENGINEERING 130870 0 25909 0 12827 0 13527 0 15064 0 198197 0 0 0 PART I, LINE 4A THE FOLLOWING INDIVIDUALS RECEIVED A SEVERANCE PAYMENT THAT IS INCLUDED IN OTHER REPORTABLE COMPENSATION IN PART II, COLUMN B (III): LAWANDA PARNELL - $ 227,691 RICHARD ARELLANO - $ 129,248 MAURICIO VIESCA - $ 133,859 FORM 990, PART I, LINE 19: THE NET LOSS REPORTED ON PART I, LINE 19 INCLUDES AN EXPENSE FOR PATRONAGE DIVIDENDS ALLOCATED TO THE PATRONS BASED ON NET OPERATING INCOME(LOSS). IN GENERAL, WHEN AN ELECTRIC COOPERATIVE BASES THE PATRONAGE DIVIDEND CALCULATION ON ITS NET OPERATING INCOME(LOSS), PAGE 1, PART I, LINE 19 - REVENUE LESS EXPENSES - WILL REFLECT THE AMOUNT OF NON-OPERATING INCOME(LOSS) NOT ALLOCATED. FOR THE CURRENT YEAR, PAGE 1, PART I, LINE 19, HOWEVER, REPORTS NET LOSS OF $2,135,448, WHICH INCLUDES THE INCOME STATEMENT EFFECT OF ACCRUED UNBILLED REVENUE AND THE RETAINAGE OF NON-OPERATING MARGINS. 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 PLUS NON-OPERATING MARGINS RETAINED. THE FOLLOWING SCHEDULE IS PROVIDED TO FURTHER EXPLAIN THE IMPACT OF THIS TRANSACTION: ADD: ACCRUED UNBILLED REVENUE 12/31/21 $19,481,723 LESS: ACCRUED UNBILLED REVENUE 12/31/20 (22,235,356) ADD: NON-OPERATING MARGINS 618,185 (A) - NET LOSS ON PAGE 1,PART I, LINE 19 $(2,135,448) (B) - BENEFITS PAID TO MEMBERS (I.E. PATRONAGE DIVIDENDS), PART I, LINE 14 $35,124,360 TOTAL 2021 NET MARGIN PER FINANCIAL STATEMENTS (A + B) $32,988,912 FORM 990, PART VI, SECTION A, LINE 6 THE COOPERATIVE WAS FORMED BY THE MEMBERS TO PROVIDE ELECTRIC SERVICE OR ENERGY 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 THROUGH USE OF SINGLE MEMBER VOTING DISTRICTS VOTING METHODOLOGY. 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. AMENDMENTS TO ARTICLES OF INCORPORATION ADDITIONALLY, PEC BYLAWS PROVIDED TO THE MEMBERSHIP THE POWER TO REMOVE DIRECTORS FROM THE BOARD BY MAJORITY VOTE EITHER BY FULL MEMBERSHIP OR BY DISTRICT. IF THE VOTE IS FOR THE FULL MEMBERSHIP, THE PETITION MUST BE SIGNED BY 5% OF THE MEMBERSHIP. IF THE VOTE IS LIMITED TO THE DIRECTOR'S DISTRICT, THEN THE PETITION MUST BE SIGNED BY 15% OF THE MEMBERS OF THE RESPECTIVE DISTRICT. 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 AUDIT COMMITTEE FOR AN INITIAL REVIEW. SUBSEQUENT TO AUDIT COMMITTEE PRESENTATION, A COPY IS PROVIDED TO THE BOARD FOR FINAL REVIEW AND APPROVAL. THIS ACTION WAS TAKEN AT THE BOARD MEETING BEFORE FILING THE FORM 990. FORM 990, PART VI, SECTION B, LINE 12C THE CONFLICT OF INTEREST POLICY REQUIRES ANNUAL AND ONGOING COMPLETION OF A CONFLICT OF INTEREST CERTIFICATION AND DISCLOSURE FORM BY ALL DIRECTORS, OFFICIALS OR DISCLOSING EMPLOYEES OF THE COOPERATIVE, INCLUDING OFFICERS AND EXECUTIVES. THE FORM, WHICH IS PART OF THE POLICY, INCLUDES AN AFFIRMATION THAT THE INDIVIDUAL WILL INFORM THE BOARD OF ANY NEW CONFLICT AFFECTING THEMSELVES OR ANY OTHER PERSON. EACH YEAR, THESE DOCUMENTS ARE SOLICITED AND GATHERED BY THE CUSTODIAN OF THESE RECORDS, WHICH INCLUDES THE BOARD'S SECRETARY FOR BOARD MEMBERS AND THE COOPERATIVE'S ETHICS AND COMPLIANCE OFFICER AND HUMAN RESOURCES DEPARTMENT FOR APPLICABLE EMPLOYEES. APPLICABLE PERSONS WHO JOIN THE COOPERATIVE ARE SUBJECT TO ADHERE TO THE POLICY AND ARE REQUIRED TO FILE THE FORM AT THE OUTSET OF THEIR EMPLOYMENT OR DIRECTORSHIP. THE COMPLETED BOARD OF DIRECTORS DISCLOSURE AFFIRMATIONS ARE FORMALLY ACCEPTED BY THE BOARD PRESIDENT IN A MEETING OPEN TO THE PUBLIC AND ARE PART OF THE PUBLIC MINUTES OF THE COOPERATIVE. THE POLICY ALSO REQUIRES ANNUAL TRAINING REGARDING CONFLICTS OF INTERESTS FOR THE ENTIRE BOARD OF DIRECTORS. FORM 990, PART VI, SECTION B, LINE 15 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER IS ANNUALLY REVIEWED AND ADJUSTED BASED ON THE CEO PERFORMANCE EVALUATION POLICY. PURSUANT TO THE POLICY, THE VICE PRESIDENT OF THE BOARD IS DELEGATED THE RESPONSIBILITY FOR FACILITATING THE ANNUAL PERFORMANCE EVALUATION PROCESS. SUCH ANNUAL PROCESS INCLUDES AN EVALUATION BY EACH DIRECTOR OF THE CEO'S ACHIEVEMENT OF CORPORATE METRICS AS DEFINED IN THE COOPERATIVE'S CURRENT STRATEGIC PLAN, THE ACHIEVEMENT OF CURRENT YEAR STRATEGIC INITIATIVES AND THE FULFILLMENT OF HIS/HER PRIMARY MANAGEMENT RESPONSIBILITIES. THE CEO ALSO PERFORMS A SELF-ASSESSMENT WITH RESPECT TO THE SAME CRITERIA. THE VICE PRESIDENT COMPILES AND DISCUSSES THE RESULTS WITH THE BOARD IN EXECUTIVE SESSION. THE CONSENSUS ARRIVED AT FOLLOWING THESE DISCUSSIONS AND THE SETTING OF GOALS FOR THE CEO FOR THE UPCOMING YEAR ARE USED FOR ADJUSTING COMPENSATION. COMPENSATION FOR THE EXECUTIVES AND SENIOR LEADERSHIP IS ESTABLISHED BY WRITTEN GUIDELINES FOR EXECUTIVES AND SENIOR LEADERSHIP ESTABLISHED BY THE CEO OR AS CONSISTENT WITH OBJECTIVE THIRD PARTY ASSESSMENTS AND BENCHMARKING. THE COMPENSATION FOR ALL OTHER EMPLOYEES OF THE COOPERATIVE, INCLUDING THOSE MEETING THE DEFINITION OF EMPLOYEE OFFICER AND KEY EMPLOYEE, IS GOVERNED BY THE EMPLOYEE COMPENSATION POLICY AND IS SET BASED ON A COMPREHENSIVE COMPENSATION ASSESSMENT THAT IS RUN ANNUALLY TO DETERMINE MARKET VALUE FOR THE RESPECTIVE POSITIONS. THE CEO IS RESPONSIBLE FOR IMPLEMENTING THE POLICY AND MAY USE OUTSIDE CONSULTANTS AND EXPERTS TO PROVIDE OBJECTIVE ASSESSMENTS AND BENCHMARKING COMPARISONS TO INDUSTRY-WIDE COMPENSATION TRENDS AND SURVEYS IN ORDER TO SET THE MARKET VALUE OF EACH RESPECTIVE POSITION. SUCH BENCHMARKING COMPARISONS INCLUDE OTHER COOPERATIVES, PUBLIC UTILITIES AND PRIVATELY-OWNED OR INVESTOR-OWNED UTILITIES AS COMPARED TO THE SIZE AND COMPLEXIBILITY OF THE COOPERATIVE. COMPENSATION IS THEN TARGETED FOR 75% OF A POSITION'S MARKET VALUE. OTHER FACTORS FOR SETTING COMPENSATION INCLUDE THE NATURE AND QUALIFICATIONS FOR THE JOB, TRAINING, EXPERIENCE, INDIVIDUAL PERFORMANCE WITH RESPECT TO PERFORMANCE METRICS, FINANCIAL RESOURCES OF THE COOPERATIVE AND OTHER RELEVANT FACTORS. FORM 990, PART VI, SECTION C, LINE 19 THE COOPERATIVE'S GOVERNING DOCUMENTS, CONFLICT OF INTEREST POLICY, ALL OTHER BOARD OPERATING POLICIES AND FINANCIAL STATEMENTS FOR THE MOST RECENTLY COMPLETED CALENDAR YEAR ARE AVAILABLE TO THE PUBLIC ON THE COOPERATIVE'S WEBSITE AT HTTPS://WWW.PEC.COOP/ABOUT-US/YOUR-COOPERATIVE/DOCUMENT-CENTER/. MEMBERS OF THE COOPERATIVE MAY BE ABLE TO REQUEST EXISTING RECORDS NOT POSTED ON THE WEBSITE THROUGH THE OPEN RECORDS REQUEST PROCESS OUTLINED ON THE COOPERATIVE'S WEBSITE. FORM 990, PARTS VI & VII THE COOPERATIVE ANNUALLY PROVIDES EACH DIRECTOR WHO SERVED ON THE BOARD DURING THE YEAR A QUESTIONNAIRE. THE COMPLETED QUESTIONNAIRES ARE USED TO COMPLETE THE APPLICABLE QUESTIONS ON THE FORM 990 PERTAINING TO BUSINESS RELATIONSHIPS AMONG DIRECTORS, OFFICERS, AND KEY EMPLOYEES, AS WELL AS TO DETERMINE IF THERE ARE ANY TRANSACTIONS WHICH MUST BE REPORTED IN DETAIL ON SCHEDULE L - "TRANSACTIONS WITH INTERESTED PERSONS". IF THE COOPERATIVE WAS UNABLE TO OBTAIN A COMPLETED QUESTIONNAIRE, THE COOPERATIVE RELIED UPON THE COMPLETED INFORMATION FOR THE PRIOR YEAR. FORMER OFFICER LAWANDA PARNELL LEFT THE COOPERATIVE IN DECEMBER OF 2020 AND DID NOT COMPLETE A QUESTIONNAIRE FOR THE 2021 FORM 990. THEREFORE, WE RELIED UPON THE PRIOR QUESTIONNAIRE WHILE PREPARING THE RETURN. FORM 990, PART VII, COLUMN F: IN ORDER TO PROVIDE RETIREMENT BENEFITS, THE COOPERATIVE PROVIDES A DEFINED BENEFIT PLAN TO EMPLOYEES MEETING THE ELIGIBILITY REQUIREMENTS. HOWEVER, THE PLAN WAS CLOSED TO NEW PARTICIPANTS AFTER JANUARY 1, 2006. CONTRIBUTIONS TO THIS PLAN ARE BASED ON THE FULL FUNDING LIMITATION OF SUCH PLAN. ADDITIONALLY, THE COOPERATIVE PARTICIPATES IN A DEFINED CONTRIBUTION PLAN UNDER SECTION 401(K) OF THE INTERNAL REVENUE CODE. EMPLOYER CONTRIBUTIONS TO THE PLAN ARE AVAILABLE TO PARTICIPATING EMPLOYEES, INCLUDING OFFICERS AND HIGHLY COMPENSATED EMPLOYEES, MEETING THE ELIGIBILITY REQUIREMENTS OF THE PLAN. THE COOPERATIVE ALSO PROVIDES HEALTH, DENTAL, VISION, AND LIFE INSURANCE TO ALL ELIGIBLE EMPLOYEES THROUGH A QUALIFIED PLAN. THE AMOUNT REPORTED ON PART VII COLUMN (F) FOR THE OFFICERS AND HIGHLY COMPENSATED EMPLOYEES IS COMPRISED OF THE ACTUARIAL INCREASE ASSOCIATED WITH PARTICIPATION IN THE DEFINED BENEFIT PLAN, IF APPLICABLE,THE TOTAL AMOUNT CONTRIBUTED BY THE COOPERATIVE TO THE 401(K) PLAN AND INSURANCE PAID ON BEHALF OF AND FOR BENEFIT OF THE OFFICERS AND HIGHLY COMPENSATED EMPLOYEES. IN ADDITION TO THE ABOVE PLANS, THE COOPERATIVE ALSO PROVIDES ELIGIBLE PARTICIPANTS POST- RETIREMENT MEDICAL 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: THE COOPERATIVE UTILIZES THE UNIFORM SYSTEM OF ACCOUNTS (USOA) ESTABLISHED BY THE RURAL UTILITIES SERVICE (RUS). IN ACCORDANCE WITH FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) ACCOUNTING STANDARDS CODIFICATION (ASC) 980, REGULATED OPERATIONS, THE COOPERATIVE RECORDS CERTAIN ASSETS AND LIABILITIES IN ACCORDANCE WITH THE ECONOMIC EFFECTS OF THE RATE MAKING PROCESS. THE USOA DOES NOT RECORD EXPENSES IN THE GENERAL EXPENSE CATEGORIES PROVIDED ON PART IX LINES 1-23. FOR FORM 990 REPORTING PURPOSES, THE COOPERATIVE SEPARATELY REPORTS DONATIONS, SALARIES AND WAGES, EMPLOYEE BENEFITS AND PAYROLL TAXES THAT ARE ALLOCATED IN ACCORDANCE WITH ITS ACCOUNTING SYSTEM. OTHER EXPENSES DESCRIBED IN LINES 1-23, HOWEVER, ARE REPORTED ON LINE 24 UNDER THE EXPENSE CATEGORIES REQUIRED BY THE USOA. FORM 990, PART IX, LINE 24D: ADMINISTRATIVE AND GENERAL EXPENSES ARE COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL SALARIES, BENEFITS & OTHER $13,785,844 OFFICE SUPPLIES 8,157,029 PROFESSIONAL SERVICES 3,328,701 INJURIES & DAMAGES 582,978 PENSION & BENEFITS 69,120 MISCELLANEOUS GENERAL 2,607,966 RENTS 469,076 MAINTENANCE OF GENERAL PLANT 5,340 TOTAL ADMIN & GENERAL EXP PER FINANCIAL STATEMENTS $29,006,054 LESS: RECLASS OF DIRECTOR FEES TO PART IX, LINE 5 (256,200) LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (11,063,616) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (3,539,183) TOTAL ADMIN & GENERAL EXPENSE PER FORM 990, PART IX $14,147,055 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 SCHDULE RECONCILES AMOUNTS REPORTED ON LINES 5-7 TO TOTAL WAGES ACCRUED AND/OR PAID: TOTAL PER LINES 5-7 $58,091,204 LESS: DIRECTOR FEES REPORTED ON FORMS 1099-NEC (256,200) LESS: EMPLOYEE OFFICER AND KEY EMPLOYEE BENEFITS INCLUDED IN LINE 5 (442,240) PLUS: SALARIES & WAGES ALLOCATED TO PURCHASED POWER EXPENSE 701,685 PLUS: SALARIES & WAGES CAPITALIZED DIRECTLY TO PLANT 33,812,555 PLUS: SALARIES & WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING & OTHER ACCOUNTS 2,627,575 TOTAL WAGES ACCRUED AND/OR PAID $94,534,579 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 NONPROFIT OPERATION ARTICLE OF THE COOPERATIVE'S BYLAWS. THE AMOUNT REPORTED ON PART IX, LINE 4 REPRESENTS THE AMOUNT OF PATRONAGE CAPITAL THAT IS ALLOCATED TO THE PATRONS RESULTING FROM THEIR PURCHASE OF ELECTRICITY FROM THE COOPERATIVE FOR THE 2021 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, LINE 24A: THE COOPERATIVE'S WHOLESALE POWER SUPPLIERS ARE THE LOWER COLORADO RIVER AUTHORITY, AEP ENERGY PARTNERS, INC., WSC ENERGY, EXELON CORPORATION (CONSTELLATION), CONSTELLATION SOLAR TEXAS AND GREENSTREET. THE $518,792,868 OF PURCHASED POWER EXPENSE, REPORTED ON LINE 24A, IS COMPRISED OF PAYMENTS MADE TO WHOLESALE POWER SUPPLIERS AND AN ALLOCATION OF POWER SUPPLY EXPENSES. FORM 990, PART IX, LINE 24E: OTHER EXPENSES ARE COMPRISED OF THE FOLLOWING: TRANSMISSION $ 2,623,696 SALES 193,166 TAXES 1,354,268 OTHER DEDUCTIONS 26,553 TOTAL OTHER EXPENSES PER FORM 990, LINE 24E $ 4,197,683 FORM 990, PART XI, LINE 9: PATRONAGE CAPITAL ALLOCATED 35,124,360. PATRONAGE CAPITAL RETIRED - TOTAL -39,283,168. PATRONAGE CAPITAL RETIRED - DISCOUNT 33,566,814. NET CHANGE IN MEMBERSHIPS 896,584. FORM 990, PART XII, LINE 2C: THE BOARD OF DIRECTORS ASSIGNED MEMBERS TO AN AUDIT COMMITTEE TO OVERSEE AND RECOMMEND THE FINANCIAL STATEMENT AUDIT AND SELECT THE INDEPENDENT FINANCIAL STATEMENT AUDITOR. PROCEDURAL CHANGES DID NOT OCCUR DURING THE YEAR. THE PEDERNALES ELECTRIC COOPERATIVE SCHOLARSHIP FUND 201 S AVENUE F JOHNSON CITY TX 78636 742897600 TO PROVIDE SCHOLARSHIPS FOR POST-SECONDARY AND TECHNICAL EDUCATION TX 501(C)(3) PF PEDERNALES ELECTRIC COOPERATIVE INC 1 PEC UNITED CHARITIES INC PO BOX 1 JOHNSON CITY TX 78636 742491188 TO SUPPORT CHARITABLE CAUSES OF OTHER 501(C)(3) ORGANIZATONS TX 501(C)(3) LINE 10 PEDERNALES ELECTRIC COOPERATIVE INC 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 0 1 1 0 THE PEDERNALES ELECTRIC COOPERATIVE SCHOLARSHIP FUND O N/A LESS THAN $50,000 THE PEDERNALES ELECTRIC COOPERATIVE SCHOLARSHIP FUND N N/A LESS THAN $50,000 THE PEDERNALES ELECTRIC COOPERATIVE SCHOLARSHIP FUND Q N/A LESS THAN $50,000 PEC UNITED CHARITIES O N/A LESS THAN $50,000 PEC UNITED CHARITIES R 181875 EMPLOYEE PAYROLL DEFERRALS