Title
Resolution - Approval of Capital Credits Distribution during Calendar Year 2026 - J Smith
Other Info
Submitted By: Janelle Smith
Department: Financial Services
Financial Impact and Cost/Benefit Considerations: Expenditure of Cooperative funds estimated in the approximate amount of $10,300,000. Expenditures of staff time limited to ordinary processing requirements.
Discussion
Pedernales Electric Cooperative Inc.'s (PEC or Cooperative) 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 permits the discounting of capital credits.
PEC conducts an annual review of the Capital Credits distribution and payments. 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.
The Retirements (distribution and payment) of capital credits in an aggregate amount not to exceed $10,300,000 would consist of approximately 1% to the oldest outstanding year without discounting, approximately 59% to the oldest outstanding year(s) with discounting and approximately 37% to the most recent year(s) with discounting each as General Capital Credit Retirements; and approximately 3% of such amount towards deceased members’ estates through Special Capital Credits Retirements. The Retirements would consist of credits on electric bills for its current members, and to any former members and deceased members’ estates who are entitled to at least $10.00 by check in 2026.
Body
NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE after its review, discussion and evaluation of the Capital Credits Policy and the financial state of the Cooperative and fairness to its members and former members, with input from the Cooperative's Chief Financial Officer, has determined that capital credit retirements as described herein and in Executive Session 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 is approved to distribute and pay out General Capital Credit Retirements and Special Capital Credits Retirements in an amount not to exceed $10,300,000 on or prior to January 31, 2026 as described herein to its eligible members as credits on electric bills, and to any former members or deceased estates who are entitled to a distribution of at least $10.00 by check.
BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE that the Chief Financial Officer, or designee, 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.