2020-10-23T08:05:07-05:00 2019-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2019-01-01 860059728 SULPHUR SPRINGS VALLEY ELECTRIC COOPERATIVE INC SULP 5203842221 350 N HASKELL WILLCOX AZ 85643 CREDEN HUBER CEO 5203842221 2020-10-20 1 WILLIAM M MILLER P00439459 8067473806 2020-10-19 X 65.182.80.152 2020-10-20 08:40:25 CD P 954CA8D01CFBC3DD23DC63FC91DC923EB9CBFAF9 587A88673713A033F58E04FDF6801CBB1F7DD2F2 2019 2021-04-22 16:20:28Z CREDEN HUBER 350 N HASKELL WILLCOX AZ 85643 113797256 0 X WWW.SSVEC.ORG X 1938 AZ TO PROVIDE QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS OF THE COOPERATIVE. 10 10 200 0 254118 92381 0 0 117651998 112331755 313910 497958 1028208 965474 118994116 113795187 203172 216329 13054518 13807457 14626574 14215441 0 0 0 90621247 84881390 118505511 113120617 488605 674570 302742275 316339797 170877929 172851649 131864346 143488148 SSVEC IS A COOPERATIVE DELIVERING SAFE AND RELIABLE ELECTRIC SERVICE, THROUGH PEOPLE WHO PROVIDE EXCEPTIONAL SUPPORT TO OUR MEMBER-OWNERS AND THE COMMUNITIES WE SERVE. 0 0 PROVIDING ELECTRIC ENERGY TO OUR MEMBERS ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. THERE WERE 52,612 ACTIVE SERVICES AT YEAR END. ELECTRIC DISTRIBUTION SERVICES (THE DELIVERY, BUT NOT THE SALE OF ELECTRICITY, TO A CUSTOMER OVER LINES OWNED, OPERATED AND MAINTAINED BY THE COOPERATIVE) WERE PROVIDED TO THE CLASS B MEMBERSHIP ON A COOPERATIVE BASIS. 0 0 0 0 0 0 0 0 0 1 0 1 0 1 1 0 0 0 0 0 0 0 0 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 1 150 0 200 1 1 1 0 0 0 0 109050739 4421015 0 0 0 X 10 10 0 0 0 0 1 1 1 1 0 0 0 1 1 1 1 1 1 1 1 0 AZ X X RON LEE CFO 5203842221 350 N HASKELL AVE WILLCOX AZ 85643 X CREDEN HUBER CEO 48.00 X 474815 0 389968 JACK BLAIR MSO 45.00 X 235617 0 81635 DANIEL WILSON DOE 48.00 X 199704 0 70685 JASON BOWLING CAO 50.00 X 194199 0 74137 ORSON GARNSEY CITO 45.00 X 190624 0 57711 RON LEE CFO 45.00 X 183349 0 57801 NATHAN HODGES COO 45.00 X 185950 0 35747 RICHARD ELLIS JOURNEYMAN LINEMAN 50.00 X 150397 0 65899 TOREY BELL ENGINEER 40.00 X 133917 0 80815 SAM FOSTER FOREMAN 40.00 X 145659 0 65980 MANUEL GONZALES TECH SVC/FLEET MANAGER 42.00 X 133746 0 56883 DAVID SCHMIDT JOURNEYMAN LINEMAN 40.00 X 144506 0 16487 CURTIS NOLAN TREASURER 7.50 1.00 X X 36149 0 0 DAN BARRERA PRESIDENT 9.00 1.00 X X 31948 0 0 JAMES JOHNSON DIRECTOR 8.90 1.00 X 31868 0 0 JOSEPH BEAM DIRECTOR 8.60 1.00 X 30079 0 0 RANDY REDMOND DIRECTOR 20.00 1.00 X 29439 0 0 DONALD GENE MANRING VICE PRESIDENT 7.60 1.00 X X 26260 0 0 KATHRYN THATCHER DIRECTOR 7.30 1.00 X 25556 0 0 PAT ENGLISH DIRECTOR 5.10 1.00 X 23285 0 0 THOMAS GOODMAN SECRETARY 4.90 1.00 X X 20887 0 0 PETE GILLESPIE DIRECTOR 4.20 1.00 X 17415 0 0 GARY PAYNE DIRECTOR (JAN-APR) 8.00 1.00 X 13069 0 0 2658438 0 1053748 52 0 1 0 DESERT SPRINGS CONSTRUCTION & REMODELING 9828 E CANA ST HEREFORD AZ 85615 CONSTRUCTION CONTRACTOR 505979 ASPLUNDH TREE EXPERT LLC PO BOX 31001-2292 PASADENA CA 91110 ROW TREE TRIMMING 393415 QUAIL CONSTRUCTION LLC 7200 E 31ST PL YUMA AZ 85365 TRAFFIC CONTROL 201182 BANKERS TITLE SERVICES 3687 N CAMPBELL AVE TUSCSON AZ 85719 REGISTRATION SERVICES 127200 FENNEMORE CRAIG PC 2394 EAST CAMELBACK ROAD SUITE 600 PHOENIX AZ 85016 LEGAL CONSULTANT 107347 7 X SALES OF ELECTRICITY 221000 106107963 106107963 PATRONAGE DIVIDENDS 221000 3226260 3226260 DISTRIBUTION SERVICES 221000 2228218 2228218 SERVICE FEES 221000 769314 769314 112331755 497958 497958 2099 2099 7265 0 7265 7265 7265 2368 2069 299 299 POLE ATTACHMENT INCOME 221000 701992 701992 INTERNET COMMISSIONS 517000 252795 252795 OUTSIDE SERVICES 811000 1024 1024 955811 113795187 112331755 254118 1209314 X 216329 13807457 2717897 8160939 1850637 886223 599745 5308041 12471737 PURCHASED POWER 56000668 DISTRIBUTION EXPENSE 5941645 ADMIN & GENERAL EXPENSE 2425163 UNRELATED BUS. INC. TAX 8680 2725456 113120617 4572845 5032771 9093527 17440287 5469066 3800556 60407 61214 2301600 2061477 1127470 1430279 389500345 169882246 214796595 219618099 59051391 61484128 6269374 5410986 302742275 316339797 9784863 8664544 145690077 138879861 15402989 25307244 170877929 172851649 X 199490 201270 0 0 131664856 143286878 131864346 143488148 302742275 316339797 X 674570 10949232 X X 0 0 0 2413207 2413207 14639116 5559291 9079825 361862455 164322955 197539500 10585567 10585567 219618099 PATRONAGE CAPITAL - AEPCO 51927518 C PATRONAGE CAPITAL - CFC 2817522 C PATRONAGE CAPITAL - NISC 97616 C PATRONAGE CAPITAL - NRTC 29067 C PATRONAGE CAPITAL - FEDERATED 661498 C PATRONAGE CAPITAL - CRC 29953 C COBANK EQUITY INVESTMENT 1892264 C ASSOCIATED ORGANIZATIONS - GENERAL FUNDS 1010 C ASSOCIATED ORGANIZATIONS - GCSECA BLDG 160626 C CAPITAL TERM CERTIFICATES-CFC 2493330 C DEFERRED COMPENSATION FUNDS 1373724 F 61484128 CONSUMER DEPOSITS 2113190 ACCUMULATED PROVISION - PENSIONS & BENEFITS 3132572 ACCRUED OPERATING TAXES 2069759 DEFERRED CREDITS - ENERGY CONSERVATION & OTHER 13858414 DEFERRED CREDITS - FT. HUACHUCA REIMBURSEMENTS 4133309 25307244 X PART X, LINE 2: THE COOPERATIVE HAS ADOPTED 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 POSITION WILL BE SUSTAINED UPON EXAMINATION BY THE INTERNAL REVENUE SERVICE, OR OTHER STATE TAXING AUTHORITY AND THAT ALL TAX BENEFITS ARE LIKELY TO BE REALIZED UPON SETTLEMENT WITH TAXING AUTHORITIES. PART IX: THE AMOUNT OF OTHER ASSETS ON FORM 990, PAGE 11, PART X, LINE 15 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, SCHEDULE D, PART IX HAS BEEN LEFT BLANK. 0 COCHISE EDUCATION FOUNDATION PO BOX DRAWER 493 BISBEE AZ 85603 263735497 501(C)(3) 5350 TEACHER OF THE YEAR DONATION BOYS AND GIRLS CLUB OF SIERRA VISTA INC 1746 PASEO SAN LUIS SIERRA VISTA AZ 85636 860801728 501(C)(3) 11500 ANNUAL DONATION; KARS FOR KIDS SIERRA VISTA AREA CHAMBER OF COMMERCE 21 E WILCOX DR SIERRA VISTA AZ 85635 742586694 501(C)(6) 7650 ANNUAL DONATION TUCSON CONQUISTADORES CLASSIC 6450 E BROADWAY BLVD TUCSON AZ 85710 202132844 501(C)(6) 7000 THE FIRST TEE OF TUCSON AND SOUTHERN ARIZONA'S YOUTH ALTHETIC PROGRAMS 2 2 PART II: ALL GRANTS, SPONSORSHIPS, AND/OR DONATIONS ARE MADE TO NON-PROFIT AND CIVIC ORGANIZATIONS THAT ARE LOCATED IN THE COOPERATIVE'S SERVICE AREA. ALL GRANTS, SPONSORSHIPS, AND/OR DONATIONS ARE INTENDED TO IMPROVE THE COMMUNITIES IN WHICH OUR MEMBERS RESIDE. X 1 1 X X 0 1 0 CREDEN HUBER CEO 413600 0 450 0 60765 0 364472 0 25496 0 864783 0 0 0 JACK BLAIR MSO 190929 0 15100 0 29588 0 67618 0 14017 0 317252 0 0 0 DANIEL WILSON DOE 174437 0 11100 0 14167 0 46231 0 24454 0 270389 0 0 0 JASON BOWLING CAO 169666 0 23827 0 706 0 49333 0 24804 0 268336 0 0 0 ORSON GARNSEY CITO 178262 0 11100 0 1262 0 50661 0 7050 0 248335 0 0 0 RON LEE CFO 168948 0 13140 0 1261 0 39322 0 18479 0 241150 0 0 0 NATHAN HODGES COO 165636 0 7400 0 12914 0 21270 0 14477 0 221697 0 0 0 RICHARD ELLIS JOURNEYMAN LINEMAN 141045 0 2200 0 7152 0 49092 0 16807 0 216296 0 0 0 TOREY BELL ENGINEER 125999 0 7000 0 918 0 56319 0 24496 0 214732 0 0 0 SAM FOSTER FOREMAN 144214 0 900 0 545 0 45434 0 20546 0 211639 0 0 0 MANUEL GONZALES TECH SVC/FLEET MANAGER 117409 0 7700 0 8637 0 50237 0 6646 0 190629 0 0 0 DAVID SCHMIDT JOURNEYMAN LINEMAN 126417 0 0 0 18089 0 12555 0 3932 0 160993 0 0 0 PART I, LINE 1A PURSUANT TO THE COOPERATIVE'S WELLNESS PROGRAM, EMPLOYEES ARE REIMBURSED FOR 50% OF THEIR OUT OF POCKET COSTS FOR PARTICIPATION IN QUALIFIED WELLNESS ACTIVITIES. THE TOTAL ANNUAL REIMBURSEMENT IS LIMITED TO $360 PER EMPLOYEE AND $360 FOR AN EMPLOYEE'S SPOUSE, PROVIDED THE SPOUSE IS COVERED UNDER THE COOPERATIVE'S HEALTH INSURANCE PROGRAM. EMPLOYEES ARE ELIGIBLE TO PARTICIPATE IN THE WELLNESS PROGRAM AFTER 60 DAYS OF EMPLOYEMENT. PART I, LINE 4B THE FOLLOWING INDIVIDUAL PARTICIPATES IN A SECTION 457(F) NON-QUALIFIED DEFERRED COMPENSATION (NQDC) PLAN, AND THE AMOUNT LISTED REPRESENTS THE ACTUARIAL INCREASE OF UNVESTED BENEFITS ASSOCIATED WITH PARTICIPATION IN THE PLAN: CREDEN HUBER $ 213,714 PART II, COLUMN C: INCLUDED IN THIS AMOUNT IS THE INCREASE IN ACTUARIAL VALUE OF BENEFITS PAYABLE UNDER A DEFINED BENEFIT RETIREMENT PLAN. THE CONTRIBUTION RATE FOR PARTICIPANTS IN THE NRECA R&S DEFINED BENEFIT PENSION PLAN ARE THE SAME FOR ALL INDIVIDUALS IN THIS MULTI-EMPLOYER PLAN. THE CHANGE IN ACTUARIAL VALUE FOR EACH PARTICIPANT, HOWEVER, VARIES WITH AGE. IN OTHER WORDS, THE OLDER A PLAN PARTICIPANT IS, THE GREATER THE INCREASE IN THAT INDIVIDUAL'S CHANGE IN ACTUARIAL VALUE, ALL OTHER THINGS BEING EQUAL. BECAUSE THIS RELATES TO A MULTI-EMPLOYER PLAN, CASH CONTRIBUTIONS TO THE PLAN IN LIEU OF THE ACTUARIAL INCREASE ARE EXPENSED IN THE FINANCIAL STATEMENTS. CREDEN HUBER: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 142,358 ACTUARIAL INCREASE IN NQDC PLAN 213,714 EMPLOYER CONTRIBUTION TO 401(K) PLAN 8,400 TOTAL REPORTED IN COLUMN C $ 364,472 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT & NQDC PLANS (365,072) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT & NQDC PLANS 139,932 EXPENSE TO THE COOPERATIVE $ 148,332 JACK BLAIR: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 61,813 EMPLOYER CONTRIBUTION TO 401(K) PLAN 5,805 TOTAL REPORTED IN COLUMN C $ 67,618 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (61,813) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 64,764 EXPENSE TO THE COOPERATIVE $ 67,334 DANIEL WILSON: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 40,768 EMPLOYER CONTRIBUTION TO 401(K) PLAN 5,463 TOTAL REPORTED IN COLUMN C $ 46,231 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (40,768) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 60,944 EXPENSE TO THE COOPERATIVE $ 66,407 JASON BOWLING: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 44,014 EMPLOYER CONTRIBUTION TO 401(K) PLAN 5,319 TOTAL REPORTED IN COLUMN C $ 49,333 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (44,014) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 59,347 EXPENSE TO THE COOPERATIVE $ 64,666 ORSON GARNSEY: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 45,299 EMPLOYER CONTRIBUTION TO 401(K) PLAN 5,362 TOTAL REPORTED IN COLUMN C $ 50,661 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (45,299) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 59,825 EXPENSE TO THE COOPERATIVE $ 65,187 RON LEE: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 34,054 EMPLOYER CONTRIBUTION TO 401(K) PLAN 5,268 TOTAL REPORTED IN COLUMN C $ 39,322 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (34,054) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 51,879 EXPENSE TO THE COOPERATIVE $ 57,147 NATHAN HODGES: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 16,232 EMPLOYER CONTRIBUTION TO 401(K) PLAN 5,038 TOTAL REPORTED IN COLUMN C $ 21,270 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (16,232) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 34,120 EXPENSE TO THE COOPERATIVE $ 39,158 RICHARD ELLIS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 46,201 EMPLOYER CONTRIBUTION TO 401(K) PLAN 2,891 TOTAL REPORTED IN COLUMN C $ 49,092 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (46,201) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 32,101 EXPENSE TO THE COOPERATIVE $ 34,992 TOREY BELL: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 52,430 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,889 TOTAL REPORTED IN COLUMN C $ 56,319 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (52,430) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 43,390 EXPENSE TO THE COOPERATIVE $ 47,279 SAM FOSTER: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 42,265 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,169 TOTAL REPORTED IN COLUMN C $ 45,434 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (42,265) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 35,234 EXPENSE TO THE COOPERATIVE $ 38,403 MANUEL GONZALES: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 46,008 EMPLOYER CONTRIBUTION TO 401(K) PLAN 4,229 TOTAL REPORTED IN COLUMN C $ 50,237 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (46,008) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 39,372 EXPENSE TO THE COOPERATIVE $ 43,601 DAVID SCHMIDT: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 10,343 EMPLOYER CONTRIBUTION TO 401(K) PLAN 2,212 TOTAL REPORTED IN COLUMN C $ 12,555 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (10,343) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 29,523 EXPENSE TO THE COOPERATIVE $ 31,735 FORM 990, PART I, LINE 19: 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, PAGE 1 , PART I, LINE 19 REPORTS NET INCOME OF $674,570, WHICH IS THE INCOME STATEMENT EFFECT OF ACCRUED UNBILLED REVENUE PLUS THE RETENTION 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/(LOSS) AS FOLLOWS: 1) NET INCREASE/(DECREASE) IN ACCRUED UNBILLED REVENUE PLUS 2) NON-OPERATING MARGINS. THE FOLLOWING SCHEDULE IS PROVIDED TO FURTHER EXPLAIN THE IMPACT OF THIS TRANSACTION: ADD: UNBILLED REVENUE 12/31/19 $ 2,319,719 LESS: UNBILLED REVENUE 12/31/18 (2,244,516) NET INCREASE IN UNBILLED REVENUE $ 75,203 ADD: NON-OPERATING MARGINS RETAINED 599,367 (A) - NET INCOME ON PAGE 1, PART I, LINE 1 $ 674,570 (B) - BENEFITS PAID TO MEMBERS (I.E. PATRONAGE DIVIDENDS), PART I, LINE 14 $13,807,457 TOTAL 2019 NET MARGIN (A + B) $14,482,027 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 DIRECTORS REVIEW THE CONFLICT OF INTEREST POLICY ANNUALLY, AND IMMEDIATELY ADDRESS ANY QUESTIONS OR CONCERNS IF THEY ARISE. THE BOARD OF DIRECTORS AND OFFICERS ARE ALSO REQUIRED TO DISCLOSE ANY ACTION OR SITUATION THAT MIGHT VIOLATE THE POLICY TO THE FULL BOARD OF DIRECTORS AS SOON AS POSSIBLE. FORM 990, PART VI, SECTION B, LINE 15 THE BOARD OF DIRECTORS USE THE EXPERTISE OF AN INDEPENDENT COMPENSATION CONSULTANT WHEN DETERMINING THE COMPENSATION OF THE CEO. THE BOARD AND THE CEO USE THE EXPERTISE OF AN INDEPENDENT COMPENSATION CONSULTANT WHEN DETERMINING THE COMPENSATION OF THE COOPERATIVE'S OTHER EMPLOYEE OFFICERS. FORM 990, PART VI, SECTION C, LINE 19 ANNUALY, THE COOPERATIVE MAILS ITS ANNUAL REPORT TO MEMBERS OF THE COOPERATIVE WHICH CONTAINS A SUMMARIZED COPY OF THE AUDITED FINANCIAL STATEMENTS. THE COOPERATIVE ALSO PROVIDES COPIES OF THEIR CURRENT AND PAST ANNUAL REPORTS AND GOVERNING DOCUMENTS ON THEIR WEBSITE. 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. 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 ACTUARIAL INCREASE IN THE DEFINED BENEFIT PLAN, THE TOTAL AMOUNT CONTRIBUTED TO THE 401(K) PENSION 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 PURCHASE OF WHOLESALE POWER FROM A GENERATION & TRANSMISSION COOPERATIVE. PATRONAGE DIVIDENDS ALSO 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 ACCOUNTING RECORDS OF THE COOPERATIVE ARE MAINTAINED IN ACCORDANCE WITH THE UNIFORM SYSTEM OF ACCOUNTS (USOA) AS PRESCRIBED BY THE FEDERAL ENERGY REGULATORY COMMISSION FOR CLASS A AND B ELECTRIC UTILITIES. 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, 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 CALENDAR TAX 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 COOPERATIVE'S 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 2019 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 THE TOTAL WAGES ACCRUED AND/OR PAID: TOTAL PER LINES 5-7 $10,878,836 LESS: DIRECTOR FEES REPORTED ON FORMS 1099-MISC (285,955) LESS: EMPLOYEE OFFICER BENEFITS INCLUDED IN LINE 5 (767,684) PLUS: SALARIES AND WAGES ALLOCATED TO NONOPERATING MARGINS 13,915 PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 3,990,450 PLUS: SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 1,481,077 TOTAL WAGES ACCRUED AND/OR PAID $15,310,639 FORM 990, PART IX, LINE 24: ADMINISTRATIVE & GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL $ 4,870,046 OFFICE SUPPLIES 206,703 OUTSIDE SERVICES 643,427 INJURIES & DAMAGES 128,597 DIRECTORS 428,299 DUES TO ASSOCIATED ORGANIZATIONS 224,716 FORT HUACHUCA ADMINISTRATIVE & GENERAL 19,711 MISCELLANEOUS GENERAL 329,145 CAPITAL CREDITS 30,159 MAINTENANCE OF GENERAL PLANT 53,786 TOTAL ADMIN & GENERAL EXP PER FINANCIAL STATEMENTS $ 6,934,589 LESS: RECLASS OF DIRECTOR FEES TO PART IX, LINE 5 (285,955) LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (2,979,107) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (1,244,364) TOTAL ADMIN & GENERAL EXPENSE PER FORM 990, PART IX $ 2,425,163 FORM 990, PART IX, LINE 24E: OTHER EXPENSES IS COMPRISED OF THE FOLLOWING: TRANSMISSION $ 390,027 SALES 299,202 CONSUMER ACCOUNTS AND SERVICE 1,738,845 OTHER DEDUCTIONS 145,986 INTERNET 145,195 TOTAL OTHER EXPENSES PER FORM 990, LINE 24E $ 2,719,255 FORM 990, PART XI, LINE 9: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 13,807,457. PATRONAGE CAPITAL RETIRED - TOTAL -2,917,320. PATRONAGE CAPITAL RETIRED - DISCOUNT 114,221. NET CHANGE IN MEMBERSHIPS 1,780. OTHER COMPREHENSIVE INCOME - PROVISION FOR PENSIONS AND BENEFITS -79,875. OTHER CHANGES IN EQUITIES 22,969. FORM 990, PART XII, LINE 2: AUDITED FINANCIAL STATEMENTS WERE PREPARED BY AN INDEPENDENT ACCOUNTANT FOR THE COOPERATIVE'S FINANCIAL STATEMENT AUDIT YEAR-END OF JUNE 30TH. THE TAX RETURN HAS BEEN AND CONTINUES TO BE PREPARED BASED ON A CALENDAR TAX YEAR-END OF DECEMBER 31. THE BOARD AS A WHOLE IS RESPONSIBLE FOR OVERSEEING THE FINANCIAL STATEMENT AUDIT AND SELECTING THE INDEPENDENT FINANCIAL STATEMENT AUDITOR. SULPHUR SPRINGS VALLEY ELECTRIC COOPERATIVE FOUNDATION 350 N HASKELL WILLCOX AZ 85643 860488826 FUND EDUCATIONAL YOUTH ACTIVIES AND QUALIFIED PROGRAMS AZ 501(C)(3) PF SULPHUR SPRINGS VALLEY ELECTRIC COOPERATIVE INC 1 SULPHUR SPRINGS VALLEY ELECTRIC COOPERATIVE CHARITABLE TRUST 350 N HASKELL WILLCOX AZ 85643 860993649 ASSISTANCE TO NATURAL DISASTER VICTIMS AND FAMILIES AZ 501(C)(3) LINE 7 SULPHUR SPRINGS VALLEY ELECTRIC COOPERATIVE INC 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 0 0 SULPHUR SPRINGS VALLEY ELECTRIC COOPERATIVE FOUNDATION N N/A - LESS THAN $50,000 SULPHUR SPRINGS VALLEY ELECTRIC COOPERATIVE FOUNDATION O N/A - LESS THAN $50,000 SULPHUR SPRINGS VALLEY ELECTRIC COOPERATIVE FOUNDATION P 118882 EXPENSE REIMBURSEMENT SULPHUR SPRINGS VALLEY ELECTRIC COOPERATIVE FOUNDATION Q 124047 EXPENSE REIMBURSEMENT SULPHUR SPRINGS VALLEY ELECTRIC CHARITABLE TRUST N N/A - LESS THAN $50,000 SULPHUR SPRINGS VALLEY ELECTRIC CHARITABLE TRUST O N/A - LESS THAN $50,000