NY Rural Elec Coop L § 60 (2021)
2021 New York Laws REL - Rural Electric Cooperative Article 6 - General Provisions Governing Property and Affairs 60 - Patronage Capital Contributions, Allocations, and Retirements.

§ 60.  Patronage  capital contributions, allocations, and retirements. (a) Each cooperative's by-laws shall,  unless  otherwise  determined  by agreement  of the members, provide for patronage capital allocations and retirements in the manner provided by this  section.  Agreement  by  the members  for  purposes  of  this  section  shall mean member approval of by-law provisions or by a majority vote of the members voting at a  duly called meeting. Any matter set forth in this section which is subject to determination  of  the  board  of  directors  shall be determined in the exercise of such board of director's business judgment.  (b) Patronage capital shall be  determined  by  a  cooperative  on  an annual  basis  and  shall  be the excess, if any, of amounts received or receivable by such cooperative from  furnishing  electricity  over  such cooperative's  operating  costs and expenses properly chargeable against furnishing electricity, as determined using such  accounting  method  or methods  as  agreed  upon  by the members. Costs and expenses chargeable against furnishing electricity shall include:  (1) expenses of the operation and maintenance of its facilities during such fiscal year;  (2) interest obligations of the cooperative coming due in such  fiscal year;  (3) depreciation and other expenses to finance or to provide a reserve for  the financing of the construction or acquisition by the cooperative of additional facilities to  the  extent  determined  by  the  board  of directors;  (4)  expenses  to  provide a reasonable reserve for working capital as determined by the board of directors;  (5) expenses to provide a reserve for the payment of  indebtedness  of the  cooperative  maturing  more  than  one  year  after the date of the incurrence of such indebtedness in an amount not less than the total  of the  interest  and  principal payments in respect thereof required to be made during the next following fiscal year;  (6) expenses to provide a fund for education in  cooperation  and  for the  dissemination  of  information  concerning  the  effective  use  of electric energy and other services made available  by  the  cooperative; and  (7)  all  other  costs  and  expenses from and directly related to the furnishing of electric energy to the patrons.  (c) "Patron", as referred to in subdivisions (b) through (h)  of  this section,  shall  be  defined as (1) a member and (2) a nonmember to whom the cooperative  furnishes  electric  energy  or  other  services  on  a patronage basis pursuant to bylaws or as agreed upon by the members.  (d) On an annual basis, patronage capital determined under subdivision (b)  of  this section shall be allocated on the books of the cooperative to each patron having furnished such capital and shall be based upon and in proportion to:  (1) the revenue from each patron or group of similar  patrons  to  the cooperative's total revenue;  (2) the contribution of each patron or group of similar patrons to the cooperative's overall patronage capital;  (3) the kilowatt-hour usage of each patron or group of similar patrons to the total kilowatt-hour usage of all patrons;  (4) any other method which is agreed upon by the members; or  (5)  any combination of paragraphs one, two, three and/or four of this subdivision as agreed upon by the members.  (e) "Retirement" in reference to  patronage  capital  shall  mean  the redemption  and  payment  in  cash  or  other  property,  as provided by subdivision (f) of this section, of patronage capital to the cooperative patrons or former patrons to whom it has previously been allocated.  The  allocation  of patronage capital to a patron's patronage capital account shall in no event create a vested right to the retirement of the  amount so  allocated.  The  board  of  directors  of  a cooperative may, in its discretion,  retire  patronage  capital  allocated  on  the books of the cooperative when it determines such retirement is consistent with  sound business  and management practices and the long-term financial stability of the cooperative. Patronage capital shall be retired according to  the method  chosen  by  the  members  and at the time the board of directors shall determine as  a  matter  of  its  discretion.  However,  patronage capital may be retired in advance of the date when it would otherwise be retired  under the previous sentence in such circumstances and upon such conditions as are agreed upon by the members, including, but not limited to, upon a patron's or former  patron's  death,  the  termination  of  a patron  or  former  patron's  electric  service,  or  a patron or former patron's filing for bankruptcy. In the event of such early retirement of patronage capital, the amount of  patronage  capital  allocated  to  the patron or former patron on the cooperative's books may be discounted for purposes  of  its retirement in accordance with such method as is agreed upon by the members. The difference between the  discounted  amount  and the patron's or former patron's patronage capital may be retained by the cooperative  as  part  of  its net savings in a manner determined by the board of directors.  (f) When the board of directors of  the  cooperative  has  determined, pursuant  to  subdivision  (e)  of  this section, that patronage capital shall be retired, the retirement may be accomplished by a  bill  credit, by the mailing of payment or notice of payment to the patron's or former patron's  last  known address of record on file with the cooperative, or by such other method as the board of directors  shall  determine  to  be appropriate.  No interest shall be paid or payable by the cooperative on any patronage capital. The amount of patronage capital being retired may be reduced by any amount owed to the cooperative by the patron or former patron.  (g) A cooperative may adopt such procedures  for  the  assignment  and contribution  of  unclaimed  patronage capital to the cooperative as are agreed upon by its members. Such procedures may include  providing  that patronage  capital  which  has  not  been  claimed by a patron or former patron, after reasonable efforts to locate said patron or former patron, shall be added to the net savings of the cooperative. Mailing of a check or notice of the availability of a check to the last known address of  a patron  or former patron by first class mail and publication of the list of patrons or former patrons having unclaimed patronage capital  on  the website and/or newsletter of the cooperative for a period of three years shall  be  deemed  reasonable  effort  to  locate  said patron or former patron.  (h) In the event that the cooperative should engage in the business of furnishing goods and services other than electric  energy,  all  amounts received  and  receivable  therefrom  which  are  in excess of costs and expenses properly chargeable against the furnishing  of  such  goods  or services  shall,  insofar as permitted by law, bylaws, or by approval of the members, be prorated annually on a patronage basis and allocated  to each  member and shall be retired to said member according to the method chosen by the members and at the time that the board of directors  shall determine  as  a  matter  of  its  discretion.  Nothing in this section, however, prevents a cooperative from furnishing goods and services other than electric energy on a non-patronage basis to  non-members;  the  net earnings of which may be retained as part of its net savings.  (i)  With respect to any cooperative formed under this chapter that is exempt from federal income taxation under paragraph twelve of subsection  (c) of section five hundred one of the internal revenue code of nineteen eighty-six, as amended, or any corresponding provision of future federal tax law, or any cooperative  which  would  otherwise  qualify  for  said exemption  but  for  having  less  than eighty-five percent (or whatever threshold may be specified  in  the  future  for  said  purpose  by  the internal revenue code) of income from members, this section shall in all events be limited to and interpreted in a manner which is compliant with the  requirements of exemption under such internal revenue code section, and any agreement by the  members  or  determination  by  the  board  of directors  under  this section with respect to the subject matter hereof shall also be limited to and interpreted in a manner which is  compliant with such internal revenue code section.