Section 1. Interest or Dividends on Capital Prohibited
The Cooperative shall at all times be operated on a Cooperative nonprofit 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 the furnishing of electric energy the Cooperative’s operation shall be so conducted that all patrons, members, and nonmembers alike, will through their patronage furnish capital for the Cooperative. In order to induce patronage and to assure that the Cooperative will operate on a nonprofit basis the Cooperative is obligated to account on a patronage basis to all its patrons, members and nonmembers alike, for all amounts received and receivable from the furnishing of electric energy in excess of operating costs and expenses properly chargeable against the furnishings 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, members, and nonmembers alike, as capital. The Cooperative is obligated to pay 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 fiscal 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, and the Cooperative shall within a reasonable time after the close of the fiscal year notify each patron of the amount of capital so credited to the member’s account. 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 on a patronage basis and any amount so allocated shall be included as part of the capital credited to the accounts of patrons, as herein provided.
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 credited to patrons’ accounts may be retired in full or in part. Any such retirements of capital shall be made in such order of priority as the Board may determine in the reasonable exercise of its discretion; provided, however, that nothing herein shall be construed as impairing or limiting the Cooperative's right to set off capital credit against obligations due the Cooperative by a member. Provided, however, that the Board shall have the power to adopt rules providing for the separate retirement of that portion (“power supply portion”) of capital credited to the accounts of patrons which corresponds to capital credited to the account of the Cooperative by an organization furnishing electric service to the Cooperative. Such rules shall a) establish a method for determining the power supply portion of capital credited to each patron for each applicable fiscal year, b) provide for separate identification on the Cooperative’s books of the power supply portion of capital credited to the Cooperative’s patrons and c) provide for appropriate notifications to patrons with respect to the power supply portion of capital credited to their accounts.
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, successors in occupancy in all or a part of such patrons’ premises served by the Cooperative or to a trustee of a trust created by a patron wherein the patron has reserved the right to revoke or amend said trust unless the Board, acting under policies of general application, shall determine otherwise, except as herein otherwise provided.
Notwithstanding any other provision of this Code of Regulations, any former patron who moves off the line with a capital credit account balance that does not exceed $500 may request an early discounted capital credit retirement. The Board shall dictate the terms and conditions of any discounted early retirement. Such discounted early retirement, if approved by the Board, shall be the discounted present day value at a discount rate established by the Board of the amount credited to the former patron’s account compared to the date any priority or percentage of the account would have been retired and paid as determined by the last percentage or priority of capital credit retirement authorized and paid by the Board in any one given year. Such discounted early retirement may be made regardless of the order of priority according to year in which the capital was furnished and credited or regardless of the percentage begin retired in any one year to all patrons past or present, depending upon which retirement plan is being used. Any such discounted early retirement shall not impair the financial condition of the Cooperative.
Notwithstanding any other provision of this Code of Regulations, the Board at its discretion shall have the power at any time upon the death of any natural patron, if the legal representatives of the member’s estate shall request in writing that the capital credited to any such patron be retired prior to the time such capital would otherwise be retired under the provisions of this Code of Regulations, to retire capital credited to any such patron immediately upon such terms and conditions as the Board, acting under policies of general application shall determine, and discounted to the present day value at a discount rate established by the Board of the amount credited to the deceased patron's account compared to the date any priority or percentage of the account would have been retired and paid as determined by the last percentage or priority of capital credit retirement authorized and paid by the Board in any one given year, regardless of the order of priority according to year in which the capital was furnished and credited or regardless of the percentage being retired in any one year to all patrons past or present, depending upon which retirement plan is being used; provided, however, that the financial condition of the Cooperative will not be impaired thereby. Notwithstanding any other provision of this Code of Regulations or other provision of the membership certificate, if any patron or former patron fails to claim any cash retirement of capital credits or other payment from the Cooperative within 4 years after payment of the same has been made available by check mailed to the last address furnished by the member to the Cooperative, such failure shall be and constitutes an irrevocable assignment and gift by such patron of such capital credit or other payment to the Cooperative. Failure to claim any such payment with the meaning of this section shall include the failure of such patron or former patron to cash any check mailed by the Cooperative at the last address furnished to the Cooperative. The assignment and gift provided for under this section shall become effective only upon the expiration of 4 years from the date when such payment was made available to such patron or former patron without claim therefore and only after the further expiration of 60 days following the giving of a notice by publication that unless such payment is claimed within said 60 day period, such gift to the Cooperative shall become effective. The notice by publication shall be 2 consecutive insertions in a newspaper circulated in the service area of the Cooperative, which may be the Cooperative newsletter. The 60 day period following the giving of such notice shall be deemed to terminate 60 days following the last date of publication thereof.
The patrons of the Cooperative, by dealing with the Cooperative, acknowledge that the terms and provisions of the Articles of Incorporation and Code of Regulations 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. The provisions of this Article of the Code of Regulations shall be called to the attention of each patron of the Cooperative by posting in a conspicuous place in the Cooperative’s office.