Title
Resolution - Approval and Amendment to 2019 Special Capital Credits Retirements (Distribution and Payment) - R Kruger
Other Info
Submitted By: Robyn Miller on behalf of Randy Kruger
Department: Financial Services
Financial Impact and Cost/Benefit Considerations: Expenditure of Cooperative funds estimated in the approximate amount of $300,000. Expenditures of staff time limited to ordinary processing requirements.
Discussion
The Cooperative's Capital Credits Policy outlines the process for both General Capital Credits Retirements and Special Capital Credits Retirements including the payment of capital credits to members, former members and deceased members' estates, and also, permits the discounting of capital credits.
Pursuant to its Policy, the Cooperative will retire capital credits in a manner that permits the Cooperative to comply with all applicable laws, all restrictions imposed by its debt financing covenants, the Cooperative Articles of Incorporation and Bylaws, is fair to the Cooperative’s members and former members, and is reasonable to maintain a healthy financial state.
The Policy also requires the Cooperative to implement its retirement strategy with certain principles considering retirements to deceased estates, special retirements, and distributions and payments to the oldest outstanding year(s) for which allocations have been made and distributions and payments to the most recent year(s) with discounting for which allocations have been made.
On October 16, 2020, by Resolution #2020-307, the Board approved the General Capital Credits Retirements (distribution and payments) as follows:
• In an amount not to exceed $6,100,000 to its members as credits on electric bills, and to any former members who are entitled to a General Capital Credits Retirement of at least $10.00 by check in 2020.
Such amounts were distributed and paid on or before December 31, 2020.
The Board also approved the Special Capital Credits retirements (distribution and payments) to former members and to deceased members’ estates:
• Special Capital Credits Retirements (distribution and payments) in an amount not to exceed $300,000 to its deceased members’ estates.
• The Board approved the distribution and payout of an amount not to exceed $5,600,000 in 2021 to former members through a Special Capital Credits Retirement.
On February 12, 2021, Governor Abbott declared a state of disaster in all 254 Texas counties based on severe winter weather with imminent threat of widespread and severe property damage, injury, and loss of life due to prolonged freezing temperatures, heavy snow, and freezing rain statewide. On February 14, 2021, PEC activated its Emergency Operations Plan.
On February 15, 2021 the Electric Reliability Council of Texas (ERCOT) entered emergency conditions and implemented required rotating service interruptions. On February 19, 2021 the President declared that a major disaster existed in Texas. Due to the emergency event and possible financial impacts, the Board will consider amending the 2019 Special Capital Credits Retirements (distribution and payments) as follows to only include:
• Retirements (distribution and payment) of capital credits in an amount not to exceed $300,000 to its deceased members’ estates to be paid in 2021.
Body
NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that the Board of Directors after its review, discussion and evaluation of the Capital Credits Policy and the financial state of the Cooperative, with input from the Cooperative's Chief Financial Officer, has determined that the amendments to the 2019 capital credit retirements as described herein will not result in any adverse impact to the Cooperative;
BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE that the Cooperative only distribute and pay out Special Capital Credits Retirements in an amount not to exceed $300,000.00 to deceased members’ estates who are entitled to a distribution, as may be most effective and in the best interest of the Cooperative );
BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that the Chief Financial Officer of the Cooperative, or any person designated by the CFO for such purpose, is authorized as a duly authorized officer or agent of the Cooperative, for and in the name and on behalf of the Cooperative, to take actions necessary or appropriate in the best interests of the Cooperative to implement these resolutions.