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 member...
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